Japanese car giants Toyota can boast retaining their title as the world’s largest motor manufacturer, after announcing they had achieved record sales of 10.23 million vehicles in 2014. They were able to outsell their market rivals General Motors and Volkswagen with some comfort, but an uncertain outlook in 2015 might see them lose the crown to their German rival.
Toyota’s global sales figures for last year beat Volkswagen, who managed sales records of 10.14 million vehicles, whilst US-based General Motors sold 9.92 million cars in 2014. However, the Japanese firm also predicted that sales would decline this year, to an expected 10.15 million vehicles. This has been put down to the demand in its domestic market tailing off.
If that should happen, it could open the door for Volkswagen to be in pole position in 2015 as the German car manufacturer has been able to continue to ride momentum in the world’s emerging economies, and this could help to see them take the lead in worldwide vehicle sales for the first time. Peggy Furusaka, an auto-credit analyst at Moody’s Investors Service said of Toyota, “Their focus is not being number 1. Toyota is more concerned about keeping profitability than chasing numbers. So for coming years, I wouldn’t be surprised to see Toyota selling fewer cars than Volkswagen.”
Toyota were able to break General Motor’s stranglehold on decades of being the world’s top automaker in 2008, but then lost top-spot just three years later as a result of the earthquake and tsunami disaster that hit Japan, which had a devastating effect on the country. Many lives were lost, homes destroyed and the economy suffered. The car industry saw production fall and there was disruption to the supply chains of all the country’s vehicle manufacturers. Despite that catastrophic disaster, in 2012 Toyota once again overtook Detroit based General Motor’s, which produces the Chevrolet and luxury Cadillac models.
Toyota were able to boost its fiscal year through the profit it made in March, forecast to 2.0 trillion yen (£1.1 billion), and said that revenue would come in at 26.5 trillion yen, thanks to a strong performance in North America, while a distinctly weaker yen inflated its bottom line. However, Toyota had warned previously about a downturn in some other key Asian markets, which included Indonesia and Thailand, whose markets had been harmed by political unrest in the countries.
There had also been growing fears about the prospects of the whole industry in China, because of the concerns about the strength of the world’s second biggest economy. Despite this, Toyota is expecting sales of 1.1 million vehicles in China this year, which represents an annual rise of 6.6 per cent, in comparison with the 13 per cent growth recorded in 2014. But Volkswagen and General Motor’s each sell more than 3.5 million units a year in the country, and both firms are planning to raise their local production capacity.
Philippe Houchois, an analyst at UBS said, “The underperformance of Toyota in China is the issue for them. But they’re very grown-up about it; there doesn’t seem to be any major hang-up about being number one.”
The recent positive announcements from Toyota have come despite the Japanese firm facing a struggle to recover its reputation for safety after a recall of millions of its cars was declared around the world as vehicles faced a variety of problems, which included the exploding air bag crisis at supplier Takata. Since the recalls in 2009, which also centred on cars suffering sudden acceleration problems, the focus at Toyota has been on profitability and quality rather than faster expansion.
Chief executive Akio Toyoda, said of the pre-crisis era, “We were like a tree that grew too rapidly.” Mr Toyoda was also cautious about expanding production, instead wanting to focus more on maximising the capacity of existing plants.
Masahiro Akita, an analyst at Credit Suisse said, “Before the Lehman crisis, all the automakers cared only about the vehicle sales number and almost all of the investment projects were approved instantaneously. Toyota will not go back to that phase.”
The manufacturer, which produces the Camry Sedan and Prius hybrid, has halted the building of any new plants for the next three years until early 2016, with a Toyota executive revealing at the latest Detroit motor show that they are now focussing on the quality of sales rather than the volume of them. Amongst some of the moves proposed by Toyota include for the company to push further into the ever expanding and fast-growing market of environmentally-friendly cars, especially in China where the government faces a struggle to contain the problems of air pollution in the country’s major towns and cities.
Toyota announced in early 2015 that it had been swamped by domestic orders for its first mass market hydrogen fuel-cell car, as demand in the first month of sales was nearly four times higher than the expected total for the whole year. The car company had received more than 1,500 orders for its ‘Mirai’ sedan since it was launched at the end of 2015. Originally, the business had hoped to sell 400 units in Japan over 12 months.
Toyota also announced plans to develop the components for hybrid vehicles with two of the Chinese automakers in what has been seen as an unprecedented technology-sharing deal, which was aimed at increasing green car sales in the biggest vehicle market in the world.
The deal has marked a move away from the Japanese carmakers’ traditional unwillingness to be involved in such deals, for fear of them losing their competitive edge. Previously, Toyota would have made the key components such as batteries and motors in high-cost Japan, before shipping them to joint ventures based overseas. However, this initiative only drove up the price of models such as its Prius, which has since seen sluggish sales in China.
Toyota also saw its shares value slip by 0.93 per cent to close at 7,588.0 yen in Tokyo, as the broader market fell into negative territory.