Toyota Expects Slow Sales, Profit Growth

Toyota Yaris Pays Respect to Hip Hop. (PRNewsFoto/Toyota Motor Sales, U.S.A., Inc.) (Pr Newswire)

TOKYO -- Toyota expects that flat sales in North America _ where higher gas prices, a housing slump and a slowing economy have tempered consumer spending _ will slow growth in its overall sales and profits this year after double-digit gains last year.

Besides the anticipated sales slowdown, Toyota officials said Wednesday that investments in new plants to boost production and research costs to develop new models will depress its profit expansion for the fiscal year through March 2008.

Japan's biggest automaker has also been spending on quality controls, after suffering a surge in recalls that analysts say may be a byproduct of the automaker's recent aggressive growth efforts.

It expects a 0.4 percent rise in profit this year, its smallest improvement since its profit slipped in the fiscal year ending March 2002, while sales grow 4.4 percent.

By contrast, Toyota Motor Corp.'s profit rose 20 percent on a 14 percent rise in sales in the fiscal year ended this past March.

The glum forecasts came as Toyota, which beat U.S.-based General Motors Corp. in worldwide vehicle production and sales in the January-March period for the first time ever, reported its group profit rose 9 percent to 440.1 billion yen ($3.67 billion) in its fourth fiscal quarter from 404 billion yen a year ago. Its quarterly sales rose 10 percent to 6.3 trillion yen ($52.5 billion).

Analysts say it will just be a matter of time before Toyota overtakes GM to become the world's No. 1 automaker _ a title that technically hinges on worldwide vehicle production for an entire year.

Toyota said its group production totaled 2.37 million vehicles globally in the quarter through March, slightly more than the 2.34 million vehicles that GM said it produced around the world for the same period.

Toyota's sales have risen as soaring gas prices boost the appeal of its models, which are reputed worldwide for fuel-efficiency, including gas-and-electric hybrids like the Prius.

Shinya Naruse, auto analyst with Nomura Securities in Tokyo, said toppling GM in global vehicle production is just the latest in Toyota's victories because it has already beaten GM in profits.

"But it is a very visible step, and it's only a matter of time," he said. "It's difficult to give one explanation for Toyota's success but it's simply its ability to come up with attractive products that sell."

Naruse notes that Toyota is not only performing well next to U.S. auto companies, including GM, Ford Motor Co. and the Chrysler unit of DaimlerChrysler AG, but also against Japanese rivals Honda Motor Co. and Nissan Motor Co.