Wednesday, June 25, 2008

Toyota Motor Corporation is going to observe sales decline in the USA for the first time since 1995

For the first time since 1995, in the USA, Japan’s largest auto maker Toyota Motor Corporation (TYO: 7203) is facing sales decline. The USA is the largest market of Toyota, but the rising fuel price, coupled with subprime loan crisis, have affected the buying capacity of the consumers resulting into big slump in car sales.

Yesterday, at the Toyota shareholders meeting in Japan, Tokuichi Uranishi, Toyota Executive Vice President, announced that the company’s US sales could go below 2.62 million vehicles Toyota sold last year. Uranishi told the 3200 share holders that they were struggling in the US at the moment. Higher fuel price and the subprime loan crisis have cut the demand.

The rise of Toyota Motor Corporation in the USA is truly phenomenal. The company has been consistently growing in the region. According to Autodata Corp., the last sales decline happened in 1995. At that time, Toyota’s sales declined by 0.4% to 1.08 million.

But as Toyota grew into a full-line manufacturer, offering a wide choice of pickups and SUVs, it became more exposed to overall economic conditions, said Tom Libby, senior director of industry analysis for J.D. Power and Associates.

"They are really not in the ideal position for today's market conditions," Libby said. "If I had to pick a company that is in the ideal position of the marketplace right now, I would pick Honda, because they have no exposure to the upper end of the market, and Toyota does."

In 2008, Toyota’s sales target was 2.64 million vehicles. Currently, Toyota Prius and Toyota Yaris are the top selling vehicles of the company and it could hardly keep up with the demands of these two vehicles. Unfortunately, Toyota’s pickup and other large vehicle sales took a big blow. Few days ago, Toyota declared to cut its Tundra pickup production at its Princeton and Indiana plants. It also decided to stop production for 14 days at its San Antonio facility. The company has also cut down its imports from Japan.

Related articles: