Toyota CEO Voices Concern on Yen, Europe, Slower U.S.
(Corrects to remove reference to auto demand in first and second paragraphs of story published June 4.)
“In the short run, the European economy and a possible slowdown in the U.S. are a concern,” though he’s optimistic on the outlook for the year, Toyoda, speaking as chairman of the Japan Automobile Manufacturers Association, told reporters in Tokyo today. The yen is also a “major concern,” he said.
Japan’s three-biggest carmakers have surrendered most of their January-to-March stock gains as concerns about the European debt crisis pushed up the value of the Japanese currency since mid-March. The yen, the worst-performing major currency in the first quarter, is the best performer this quarter, according to data compiled by Bloomberg.
Toyoda said he’s still optimistic for the year as consumers replace their vehicles. Toyota is forecasting group sales to climb 21 percent to a record 9.58 million vehicles in 2012 after natural disasters in Japan and Thailand hobbled production last year.
“In Europe, where vehicle ownership is already very high, the cycle that drivers replace their old cars may slow down, but measures to avoid a major slowdown in the replacement cycle are taken in each country,” Toyoda said. “In emerging markets, demand itself is growing, so volume itself will still grow.”
Six Major Headwinds
In the U.S., light-vehicle sales in May ran at a 13.8 million seasonally adjusted annualized rate, according to data compiled by Autodata Corp. last week. The pace missed the 14.4 million average estimate of 14 analysts surveyed by Bloomberg and slid below 14 million for the first time this year.
Longer term, Toyoda said Japanese carmakers face six major headwinds: the strong domestic currency, stricter fuel-emission standards, lack of trade partnerships, high corporate taxes, heavy taxation on car purchases, and unstable power supply.
Asked about unprofitable Renesas Electronics Corp. (6723), the world’s biggest maker of automotive chips, Toyoda said Japanese carmakers have been in talks with the nation’s semiconductor companies to avoid supply disruptions as in the wake of last year’s March 11 earthquake and tsunami. Renesas, which has never posted a profit since it was reorganized in 2010, is planning an overhaul that may involve 10,000 job cuts, a person briefed on the matter said May 25.
“The auto industry needs to seriously think and hold further close discussions with the Japanese semiconductor industry,” Toyoda said, without naming any chipmakers.
On concerns over Europe, Toyoda said the downturn in the financial markets has preceded actual sales results.
“In reality, compared with the world of finance, there is a slight gap in the timing of when things occur,” Toyoda said. “For there to be any impacts in the real world, it takes time, unlike information, which comes in a very timely manner.”
On China, Toyoda said demand may rebound in the longer term.
“Though there is concern over the Chinese economy’s outlook, there is still sustainable growth in China, and the buyers are spreading to the middle class,” Toyoda said.
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