For , the company trimmed its global group-wide sales forecast to The Toyota group includes Daihatsu Motor Co T and Hino Motors Toyota raised its North American sales target for the financial year to next March while cutting its target for Asia excluding Japan and China, although its first-quarter profit margins in Asia rose slightly.
Toyota, which does not plan to build any new plants globally until around , is still giving no hints on what its future investment plans might be. The automaker has annual global production capacity of about 9. For the year to March , Toyota stuck with its full-year operating profit forecast of 2. That would be a record high, although just a 0. Toyota's shares ended flat at 6, yen before the earnings announcement, compared with a 1 percent drop in Tokyo's benchmark Nikkei average.
But matching Toyota's huge sales volume will not be an easy task, at least in the near future. Free trade agreements with these countries, coupled with low-cost facilities, have made Indonesia the sweet spot for export activities. Toyota's Thailand sales are slowing due to the ongoing political unrest in the country and the Japanese giant could opt for a production cut.
In such a case, Toyota could easily import Indonesian-made cars to Thailand to meet demand. Toyota may also export more units from Indonesia to Australia and Middle Eastern countries. The company will be shutting its Australian plant in in order to cut losses in the region.
Australians have a weakness for Toyota cars; any increasing demand can be fulfilled by importing cars from Indonesia. Low car ownership and growing disposable income The world's fourth most populous country has a dismal car ownership rate -- just 45 in own a car. The good news is that Indonesia's GDP is growing and disposable income is going up.
Higher disposable income means that the populace will have more money to spend on things like new cars. Auto sales in Indonesia grew Analysts expect the industry to sell more than 1. Toyota is investing heavily in the region to expand its production capacity and likely will be in a position to meet that growing demand. Growing popularity of eco-friendly cars Environment-friendly cars a re becoming increasingly popular in Indonesia, mainly to get the tax incentive.
The government initiated a "low-cost-green-car" program past year in order to encourage the production of eco-cars as well as to reduce the country's dependency on gasoline. Toyota is investing heavily in Indonesia's green revolution. In September, the company rolled out a green car model, the Agya, which has become a top seller in Indonesia. Honda, too, introduced its low-cost Brio Satya in November. GM has adopted a wait-and-watch approach and may jump on the bandwagon going forward.
Toyota Agya: Source: Toyota. Big markets are levelling The auto industry in the U. Though Toyota expects U. Demand for Toyota cars in the U. Graph by author. Source: goodcarbadcar. Demand in the company's home market will also suffer this year. The Japan Automobile Manufacturers Association expects auto demand to drop roughly 9. Parting thoughts Sales in Toyota's big markets are slowing, and Thailand is becoming a constant pain.
But there's not much to worry about as the automaker's close business association with Indonesia could prove to be a ready Plan B for its production hiccups in Southeast Asia. Car sales in Indonesia are going to increase, and there is a lot of export potential in the country.
Already a top seller in Indonesia, Toyota will leave no stone unturned to capitalize on the present opportunities. Cost basis and return based on previous market day close. Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of
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