DETROIT -- In the face of slumping stock markets, continued weakness in U.S. auto sales and concern over the viability of Detroit's Big Three car makers, Toyota Motor Corp. expects to make money in its North America business this fiscal year, according to a top U.S. executive.
"I know that we are profitable and I know that we plan to be profitable," Jim Lentz, president of Toyota Motor Sales, said in an interview.
This comes even after Toyota last month cut its North American sales target for 2009 to 2.7 million vehicles, down from its original target of 3.1 million, as it lowered its global sales forecast to 9.75 million vehicles for next year. The tough U.S. vehicle market this year in the face of rising gas prices and a weak economy, hit Toyota's fiscal first quarter profit causing a 28% fall in the quarter ending June 30 compared with a year ago.
When the U.S. market shifted away from big trucks and sport-utility vehicles Toyota was caught off guard. Known for its small vehicles, the Japanese car maker found itself with not enough supply. Competitors like Honda Motor Co. and Nissan Motor Co. have both seen an increase in their small car sales this year, while Toyota's car sales fell 2.5% in the first eight months of the year from a year ago.
Toyota has taken measures to address the lack of supply by adding overtime shifts at Corolla factories and increasing imports of the sub-compact Yaris.
"It's a tough year for us as well," Mr. Lentz said pointing out that Toyota closed down two production lines this year for three months to adjust its inventory to the lower market demand.
Going forward, Mr. Lentz is looking to the housing market for clues to when auto sales may turn around. "Where we need to see a break to see a lift in business is on the housing side, more so even than on the credit side," Mr. Lentz said in an interview. "Our consumers that have seen a lot of deterioration in the equity of their homes especially in markets like California and Florida."
California and Florida account for 30% of Toyota's sales in the U.S., higher than the 20% industry average, Mr. Lentz said. Both states have been hard hit by the housing crisis that has many home owners with mortgages larger than the value of their residence.
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