Toyota Expects Slump in 2015 Sales

Car industry sales have recovered from the recession in almost every large market around the world. However, Toyota Motor Corp. (NYSE: TM) has trimmed its sales expectations for its next fiscal year. The fact that Japan is its home will be the primary reason.

Global sales vehicles results improved in the world’s three largest markets in 2014. That is so even in Europe, the weakest one. The rebound in the United States has been unexpectedly strong, and 2015 probably will be another record year. In China, the world’s largest car market, increases continue but they have slowed.

However, Toyota does not expect to join the worldwide growth trend. Management of largest Japanese car company, and by most measures the largest car manufacturer in the world, forecast a drop of 1% in fiscal 2015 to 10.15 million cars and light trucks.

Ironically Toyota’s problems stem almost completely from being based in Japan. Toyota sales in Japan are expected to fall 9% to 2.1 million. However, even outside Japan, sales are only expected to improve 2% to 8.06 million. This means Toyota likely will give up market share in most of the world’s major regions.

Toyota’s global sales show how much results can be affected by home market activity. Japan has dipped into another recession, so as the lead car company, Toyota cannot avoid the damage. It does not have the benefit of operating from a country in which sales are surging. This home team benefit has been the primary reason for the turnarounds of General Motors Co. (NYSE: GM) Ford Motor Co. (NYSE: F) and Chrysler division of Fiat Chrysler Automobiles N.V. (NYSE: FCAU). Volkswagen, which has a 24% market share in Europe, has been helped by the modest recovery there. China market leaders VW and GM have benefited from their early efforts in the People’s Republic.

Toyota’s sales drop is mostly due to being in the wrong place at the wrong time. If the recession in Japan persists, Toyota may suffer another disappointing year in 2016.

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