Toyota’s (TM) Nutty US Forecast

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Toyota (NYSE: TM) says it expects car sales in North America to stay about the same as they were in 2007. That would man around 16 million units sold.

"I believe U.S. economic fundamentals are strong," Toyota President Katsuaki Watanabe told reporters. "I think we can secure the same level of demand in America as last year," according to Reuters. The company expects that sales of small, fuel-efficient vehicles to make up for drops in SUVs and light truck.

Toyota must be looking at a different world that almost everyone else is. Units sales in the last three months of 2007 and the first two months of 2008 were anemic. With the economy getting worse, it is hard to believe that the trend can reverse itself. Most other industry observers think that total vehicle sales will be lucky to top 15.5 million and could go lower in a deep recession or due to rising gas prices.

The other piece of bad news is that, even if total car sales stay flat with last year, US car companies do not make as much money on light sedans as they do trucks and sport utility wagons.

No matter how it is cut, Toyota may want to redo its calculations.

Douglas A. McIntyre