Image: Katsuaki Watanabe
Junji Kurokawa  /  AP
Toyota Motor Corp. President Katsuaki Watanabe announces the plan Wednesday. The automaker, known for fuel-efficient vehicles, has been helped by soaring oil prices.
updated 9/20/2006 4:19:20 PM ET 2006-09-20T20:19:20

Toyota announced an ambitious plan Wednesday to boost global sales to 9.8 million vehicles in 2008 — driving home a message of stellar success as its troubled U.S. rivals are closing plants and scaling back production.

Japanese automaker Toyota Motor Corp. already surpassed Ford Motor Co. as the world’s No. 2 automaker in annual global vehicle sales in 2003.

And the latest plan shows Toyota is readying to overtake General Motors Corp. as No. 1. GM sold 9.2 million vehicles worldwide in 2005, the second-largest volume in the company’s history.

Soaring oil prices have proved a godsend for Toyota as drivers turn to fuel-efficient cars. Toyota models have a solid reputation for that with the Prius hybrid, Corolla compact and the midsize Camry, the best-selling model in the U.S. for eight of the last nine years.

In contrast, GM and Ford have long relied on sales of larger vehicles, including trucks and sport utility models, to drive profits, and have been devastated by the recent consumer shift to small cars.

Toyota said it sold 8.13 million vehicles worldwide in 2005, and is set to sell about 8.85 million vehicles this year, including sales from subsidiaries, truckmaker Hino Motors and Daihatsu Motor Co., which makes small cars.

Toyota’s share of the American market is growing, mainly at the expense of the U.S. makers, climbing to 16.1 percent in August, up from 13.8 percent a year ago.

“American automakers are in trouble because their products aren’t selling,” said Shotaro Noguchi, auto analyst with Mitsubishi UFJ Securities Co. in Tokyo.

He said Toyota’s main challenge would be to keep profitability up as it lifts vehicle sales. “It’s a positive and aggressive plan,” he said.

Toyota President Katsuaki Watanabe declined to give a vehicle production target for 2008 but said the number may be slightly higher than the sales figure.

“We are aiming for steady growth through strengthening all our operations,” Watanabe told reporters at a Tokyo hotel, adding the manufacturer hopes to strengthen quality control, expand overseas production and cut costs.

According to figures released by Detroit-based GM earlier this month, the American automaker produced 9.05 million autos worldwide in 2005.

GM does not release forecasts for its global vehicle sales but is aware of the serious rivals it faces, spokesman John M. McDonald said Wednesday.

“We respect our competition around the world, and were realistic about our challenges and opportunities,” he said. “We know we have to earn the right to maintain our global sales leadership, and were doing that day after day.”

When comparing earnings, the contrast between GM and Toyota is even more striking.

Toyota’s profit jumped 39 percent in its fiscal first quarter ended June 30 to 371.5 billion yen ($3.1 billion).

In contrast, GM lost $3.4 billion in the April-June period, mostly because of an anticipated charge for employee buyouts and other restructuring costs. Without one-time charges, the company would have earned $1.2 billion for the quarter.

GM has been stumbling amid intense competition from Asian rivals, including Toyota, and lost $10.6 billion last year. Since November, it has been tackling major restructuring that called for closing 12 plants by 2008, slashing its work force, reducing capacity and cutting costs.

GM is in talks with Nissan Motor Co. of Japan and Renault SA of France about the possibility of joining their global alliance.

Last week, Ford announced a revised turnaround plan that will cut $5 billion in annual costs by the end of 2008 by slashing another 10,000 white-collar workers on top of 4,000 cuts earlier this year and offering buyouts to all 75,000 unionized employees.

Under the plan, the Dearborn, Mich.-based automaker said it’s shutting down two more plants to remake itself into a smaller, more competitive car company.

Ford has also placed its Aston-Martin luxury sports car brand up for sale, and it is reviewing its other Premier Automotive Group brands: Jaguar, Volvo and Land Rover.

Meanwhile, Toyota is adding jobs. Watanabe said Toyota plans to increase engineers by 8,000 people by 2010.

Atsushi Kawai, an analyst at Mizuho Investors Securities, said Wednesday’s strategy plan underlined Toyota’s ambitions.

“It’s clear that Toyota is intent on maintaining its fast pace of growth,” said Kawai.

He told Dow Jones Newswires that the risks Toyota faces are mostly external, such as a possible slowdown in the Chinese market. Another risk is possible damage from the coup in Thailand, an important manufacturing base for Toyota and other Japanese carmakers.

Watanabe said Toyota production has been halted in Thailand, where an army commander carried out a quick bloodless coup, and said it received an endorsement from the country’s king. It was still unclear how sales and production would be affected by the coup, he said.

Toyota raised its profit forecast for its parent company to 500 billion yen ($4.3 billion) for the fiscal half year ending Sept. 30, up from its initial forecast of 380 billion yen and the 283.6 billion yen earned during the corresponding period in the fiscal year ended March 31.

Toyota, which does not give a consolidated earnings forecast, changed its parent’s projected sales forecast for the first half to 5.5 trillion yen ($46.9 billion). It had earlier forecast 5.2 trillion yen in sales, up from 4.7 trillion yen the previous year.

The biggest gain in vehicle sales in coming years will come from Asia outside Japan, including China, and they will also continue to grow in North America and Europe, although less dramatically, according to Toyota. Vehicle sales in Japan will stay flat, it said.

Toyota shares, which had risen to nearly 7,000 yen ($60) earlier in the year, inched down 0.8 percent to close at 6,230 yen ($53) on Wednesday in Tokyo.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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