Toyota Expects Steady U.S. Demand, Worried About Yen
The head of Toyota Motor said he expected steady demand in North America this year despite a slowing economy, and said the automaker may need to take steps to counter a surging yen.
The dollar has slid 10 percent versus the Japanese currency this year, dropping below 100 yen for the first time in over a decade, amid fears of a U.S. recession. Toyota expects North America to account for around 30 percent of its sales in 2008.
"I believe U.S. economic fundamentals are strong," Katsuaki Watanabe, president of the maker of the Camry sedan and high-end Lexus cars, told reporters. "I think we can secure the same level of demand in America as last year."
Late last year, Watanabe sounded a cautious tone on the U.S. market, saying it could be hurt by the fallout of the subprime loan crisis and higher oil prices.
Toyota and other Japanese automakers face a stronger yen at the same time Korean counterparts such as Hyundai Motor stand to potentially benefit from the won, which hit a fresh two-year low against the dollar on Thursday.
On Thursday, the dollar fell below 100 yen for the first time since late 1995 on worries over the health of the U.S. economy and the financial sector.
"It might be about time to start thinking of various measures to deal with it," Watanabe said when asked about the strengthening Japanese currency. "But since we don't know how much further the yen will rise, there is no need to scramble and take hasty action."
Watanabe had said earlier this month that the yen had strengthened too much and that it may be difficult to offset the currency impact with increases in vehicle sales and costs cuts.
For every one yen that the Japanese currency appreciates, Toyota says its operating profit declines by about 35 billion yen.
Japanese auto executives have generally forecast U.S. demand for light vehicles at 15.5 to 16 million vehicles this year, buoyed by strong fuel efficiency. That compares with 16.15 million sold in 2007.
Shares of Toyota ended the day down 3 percent at 5,250 yen, almost in line with a fall in the benchmark Nikkei average.