Toyota, the world’s largest carmaker, expects the nation’s economic recovery boosted by the buildup to the 2020 Tokyo Olympics will help domestic vehicle demand weather a planned sales tax increase in April.
Toyoda’s outlook is shared by executives at other Japanese automakers who project the economic recovery, led by Prime Minister Shinzo Abe’s efforts to end deflation, will continue through this year. In Japan, the levy will be raised to 8 % from the current 5 %, and is set to be increased to 10 % in 2015.
The business environment should be “sunny after cloudy,” Akio Toyoda, president of Asia’s biggest carmaker, said yesterday in Tokyo. “Along with the three arrows, there is now a fourth arrow, which is the Tokyo Olympics. There will be some impact from the sales tax increase, but it should be limited, and at most, last about three months.”
“There may be some impact from the sales tax, but by around July, demand should be back to about what it is now,” Yasuyuki Yoshinaga, president of Fuji Heavy Industries Ltd. (the company owns Subaru), said. “For the foreign exchange rate, we hope that it will stay at a stable level above 100 yen.”
Toyota is forecasting net income to climb 74 % to 1.67 trillion yen ($16 billion) in the year ending March 31 as the weaker yen helps boost profits. Every one-yen drop against the dollar will boost Toyota’s annual operating profit by about 40 billion yen, according to the carmaker.