Does Toyota have what it takes to stay on top?

US, Europe saved Toyota earnings: Motley Fool

As Toyota hits a speed bump in high-growth emerging markets, which account for about 40 percent of global sales, does the world's largest automaker have what it takes to hold on to its crown?

The Japanese auto giant on Tuesday reported a 4.6 percent rise in profit to $5.72 billion for the April-June quarter, as softness in markets such as Thailand, Japan, India, Indonesia and Brazil offset strength in the U.S. and Europe.

Sales climbed 3 percent in North America and 7 percent in Europe during the quarter, helped by improving economic conditions, but dropped 2 percent in Asia outside Japan, according to calculations by the Wall Street Journal.

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Jason Moser, analyst at Motley Fool says while emerging markets are a headwind for Toyota, the carmaker's reputation for quality products and broad product line-up in developed markets will help it retain its leading position.

"Toyota has been able to recover some pretty big recall missteps recently, which is historically tough to overcome...they have a global foot print and continue to bring product to market that consumers want - that's really the key," Moser told CNBC.

In September, Toyota plans to begin selling a reworked Camry to deliver a boost to what has been the top-selling car in the U.S. market for the last 12 years.

Tomohiro Ohsumi | Bloomberg | Getty Images

With global sales of 5.097 million vehicles, Toyota continued to rank as the world's top automaker in the first six months of the year. It was followed by Volkswagen, which knocked General Motors out of second place. Volkswagen sold 4.97 million vehicles, outpacing General Motors' 4.92 million vehicles.

However, Toyota on Tuesday trimmed its global group-wide sales forecast to 10.22 million vehicles, a reduction of 110,000 vehicles. The Toyota group includes Daihatsu Motor Co and Hino Motors.

Yoshiaki Kawano, manager, Japan/Korea vehicle sales forecasts at IHS Automotive says Toyota's investment in green cars, or gasoline-electric hybrids, is another factor that will help the company stay on top.

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Toyota Motor leads the industry in next-generation technologies such as hybrid vehicles, and the launch of the fourth-generation Prius at end-2015 is likely to further reinforce its edge, say analysts.

Mohit Arora, executive director at J.D. Power and Associates says with the Chinese government stepping up its support for electric vehicles as part of efforts to combat pollution in cities, this could help strengthen its position in the world's largest car market.

Earlier this year, the government said it would extend a program of subsidies for buyers of electric-powered vehicles after the current subsidy regime expires in 2015.

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Peter Boardman, managing director at Tradewinds, meanwhile, notes that Toyota is more focused on driving up profits and the quality of its product rather than market share.

"If you compare their profit levels, even though it's quite high right now with the weaker yen, it is still smaller than say BMW, Daimler and Volkswagen. They are targeting trying to generate a strong profit so they can then reinvent for the future," Boardman said.