Toyota Raises 2008 Sales Forecast on Overseas Demand

Dec. 25 (Bloomberg) -- Toyota Motor Corp. raised its sales forecast for 2008 to 9.85 million vehicles, cementing the company's lead as the world's most profitable carmaker.

Sales will rise 5 percent from an estimated 9.36 million this year, the Toyota City, Japan-based automaker said in a release today. Toyota plans to make 9.95 million vehicles, also a 5 percent increase. The company previously forecast sales of 9.8 million next year.

Toyota, close to ending General Motors Corp.'s 76-year reign as the world's largest automaker by sales, needs to sell more vehicles in emerging markets to achieve its targets, as demand for automobiles is forecast to decline in the U.S. and Japan, the company's two biggest markets. Toyota opened a factory in St. Petersburg, Russia, last week and will add production in China next year.

``Toyota will solidify its position as the top carmaker in 2008,'' said Hitoshi Yamamoto, who manages the equivalent of $5.5 billion in Japanese equities as chief executive officer of Fortis Asset Management in Tokyo. ``The company's cars give it an edge.''

Toyota made an estimated 9.51 million vehicles this year, up 5 percent from 2006. GM said on Dec. 3 its production will total about 9.26 million in 2007.

Sales and production figures for Toyota include vehicles built by its Daihatsu Motor Co. and Hino Motors Ltd. subsidiaries.

Emerging Markets

The automaker earned net income of 1.64 trillion yen ($14 billion) in the year ended March 31 compared with General Motors's $1.98 billion loss for the calendar year. GM in November reported a record $39 billion quarterly loss.

Toyota rose 1.3 percent to close at 6,100 yen at 3 p.m. on the Tokyo Stock Exchange. The stock has fallen 23 percent this year, compared with a 9.7 percent drop in the benchmark Nikkei 225 Stock Average.

Automakers are boosting sales and production in emerging economies such as China, Russia, and India, where rising incomes are making automobiles affordable to more people. The growth is offsetting slumping sales in Japan and the U.S., the world's biggest auto market.

``The importance of emerging markets will increase next year as demand in the U.S. may fall,'' Fortis's Yamamoto said.

Toyota aims to increase sales in Asia outside Japan, excluding those by Hino and Daihatsu, by 20 percent to 1.58 million vehicles next year, Executive Vice President Tokuichi Uranishi told reporters in Nagoya today.

Europe, Japan

Sales in China may jump 43 percent to 700,000 as Toyota starts to make Yaris compact cars in the country. The carmaker needs more capacity in China to catch up with faster-than- expected growth, Uranishi said.

Toyota said Dec. 21 it may build a second car plant in Russia. The company will also sell more cars in Europe, the Middle East and Central and South America, Uranishi said today.

In Europe, sales excluding Hino and Daihatsu may rise to 1.27 million vehicles next year, including 200,000 units in Russia, from 1.24 million. Toyota forecast sales in the Middle East to increase to 510,000 from 480,000. It expects to sell 420,000 vehicles in Central and South America.

Toyota's sales in Japan will be little changed next year at about 2.27 million vehicles, the company forecast. Industrywide sales of cars, minicars, trucks and buses in the country may decline 1.2 percent to about 5.32 million, the Japan Automobile Manufacturers Association said Dec. 20.

U.S.

Demand for automobiles in Japan declined for a third straight year in 2007 as the country's population decreased and wages fell. Auto sales will drop to the lowest in 26 years next year, according to the association's forecast.

Toyota predicted an increase in 2008 U.S. sales to 2.64 million vehicles from 2.62 million this year. Industrywide U.S. sales may be unchanged or fall next year, as the world's largest economy may slow down, said Katsuaki Watanabe, Toyota's president.

``We're getting to the stage where Toyota has grown so impressively in recent years that it's going to find the next stage of growth quite difficult'' in the U.S., said Ashvin Chotai, an automotive analyst for Global Insight Inc. in London.

Toyota added a pickup truck plant in Texas last year and will open a second plant in Ontario, Canada, to make RAV4 SUVs in 2008. The company is also building a plant in Mississippi that will make Highlander SUVs.

``The company's sales forecast may be very challenging, depending on the U.S. economic outlook next year,'' said Koji Endo, a senior analyst at Credit Suisse Securities (Japan) Ltd. in Tokyo. Toyota may report a drop in earnings next fiscal year, he said.

Hybrids, Batteries

Toyota, the world's largest producer of gasoline-electric hybrid cars, is in a race against GM to develop the first ``plug- in,'' or a hybrid model that can be recharged using an electrical outlet. Toyota is considering mass production of lithium-ion batteries with Matsushita Electric Industrial Co. to power such vehicles, President Watanabe said. GM, which is developing the Volt electric car, also plans to use lithium-ion batteries.

Toyota and Matsushita have a venture called Panasonic EV Energy Co. to manufacture batteries for Toyota's hybrids. The venture will also increase production capacity of the nickel- hydride batteries now used to power Toyota's hybrid vehicles.