After the Japanese company decided to raise again its profit target for the year to end-March, a Toyota executive also voiced their lifting expectations regarding the US market, which in their opinion should continue to a mild recovery in 2014.
Happy about retaining its Number 1 global sales crown and the fact that profit continues to soar on the weak yen that boosts earnings from Japan exports, Toyota forecast its operating profit should rise to a record 2.4 trillion yen ($23.7 billion) and more importantly that one of its biggest markets, the US, will see industry wide sales edge around 16 million vehicles in 2014 from last year’s 15.58 million. Still, Toyota faces some uncertainties in emerging markets, which are poised to make up for the bulk of automotive expansion in the coming years, as Toyota has around 45 % of its sales there.
“Because downside risks exist in emerging markets such as the so-called ‘fragile five’, including Indonesia and Brazil, how Toyota’s sales go in the developed markets will be increasingly important for it to maintain its profitability,” said Takumi Hoshi, an automotive sector analyst at Toyo Securities.
On the other hand, the US holds up to around 15 % of the Japanese giant’s operational profit, while sales account to nearly 30%. Fortunately for Toyota, even though competition there is heating up, the company still has room to improve: its operating margin in America was 5.2 % for the October-December period, a good deal below the 9.1 % it registers in its global business.