Toyota Executives See Two More Years of Strong U.S. Auto Sales

  • December gain will push 2015 to all-time high, Fay says
  • Deliveries seen stable in 2016, 2017 as interest rates rise

Toyota Motor Corp. expects two more years of strong U.S. auto sales as low gasoline prices and stable economic growth help the automaker generate record profits, two of the automaker’s executives said.

Industry deliveries this year are poised to overtake the current annual record of 17.4 million, set in 2000. Bob Carter, head of Toyota’s U.S. operations, stopped short of predicting another all-time high for 2016 while indicating that sales may come close.

“If ’16 comes in at 17.4 or 17.3 or 17.2” million, “you’re still going to see a smile on all of our faces,” he said Thursday in an interview in Detroit.

With several of its U.S. plants running almost around the clock and with low gasoline prices encouraging consumers to shift to high-profit pickups, vans and sport utility vehicles, Toyota is forecasting record net income of 2.25 trillion yen ($18.3 billion) for the fiscal year ending in March.

Carter predicted that the U.S. industry’s sales will remain strong in 2016 even if interest rates increase slightly. But he ruled out a major increase like the one which occurred in 2014, when they surged by about 1 million vehicles.

For the past three months, the annual sales pace exceeded 18 million, an unprecedented streak. An increase in December deliveries of about 5 percent would be enough to establish a new yearly peak.
 

‘Lining Up’

The trends for deliveries are continuing in December and are pushing the industry toward the new annual record, said Bill Fay, the Toyota brand’s top sales executive in the U.S.

“With the August-through-November activity in the market and the momentum and the year-end push and the consumer confidence, gas prices, interest rates -- they’re all lining up,” Fay said.

Carter said he was amazed to see gasoline selling for $1.59 a gallon this week near the Detroit airport. These low prices will help drive another two years of strong sales, he said. They’re also pushing consumers to light trucks, which accounted for 59.7 percent of U.S. sales in November, Carter said. That’s up from just 48 percent in 2006, he said.

Automakers are trying to build market share now before a potential peak next year or in 2017, said Eric Lyman, a vice president at TrueCar Inc. Toyota’s incentives were about 14 percent higher in November than a year earlier, including zero-percent financing on its Camry sedan, according to the provider of vehicle price data. That helped the Toyota City, Japan-based company boost monthly sales 3.4 percent, outpacing the industry’s 1.3 percent gain.

“The automakers see the headwinds coming, so as the saying goes, they’re trying to make hay while the sun is still shining,’’ Lyman said.

Federal Reserve officials have signaled that they will probably raise interest rates this month, ending a seven-year stint of near-zero borrowing costs.

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