Toyota to cut sales target

Toyota Motor Corp will cut its global sales target for calendar 2008 by 3.6 percent to around 9.5 million vehicles to reflect a sharp slowdown in the United States, Japanese public broadcaster NHK said yesterday.

The world's biggest automaker had said it would announce revised sales figures for the tough US market some time this month. A source with knowledge of the situation said Toyota would lower its worldwide sales target along with that.

Shares of Toyota, Japan's biggest issue with a market value of about $150 billion, closed the morning session in Tokyo down 1.3 percent at 4,620 yen, the lowest in nearly three years. That underperformed a 0.9 percent decline in Japan's transport equipment subindex. By early afternoon Toyota was down 0.4 percent while the subindex was down 0.1 percent.

Analysts and market participants said the lowered global sales forecast was within expectations, with European demand also suffering recently to drown any overshoot in booming but smaller markets such as China and the Middle East.

"This is a good chance to buy Toyota," said Naoki Fujiwara, a fund manager at Shinkin Asset Management, adding that investors had already sold the stock in anticipation of a slowdown in demand. "The automaker is now laying the foundations for future growth."

Fujiwara said Toyota's shares had an attractive dividend yield of 3 percent, roughly double that of the benchmark government bond.

While the US market presented a much bigger challenge than Toyota or any other automaker had anticipated, UBS Securities analyst Tatsuo Yoshida said the lowered sales forecast was not enough to lead to a profit warning.

Negative factors

"The situation in the United States and higher raw materials prices are negative factors, but the yen is at a more favorable level than carmakers had assumed for the year," he said.

The dollar averaged around 104 yen during the April-June first quarter of the business year, against Toyota's assumption of 100 yen for the year. A 1 yen move in the dollar affects Toyota's operating profit by 40 billion yen ($382 million).

Toyota is due to announce first-quarter results on Aug 7.

Hit by a demand meltdown for pickup trucks and large sport utility vehicles in the United States, its biggest single market, Toyota last week announced a major overhaul of its US manufacturing plans to shift to more fuel-efficient cars.

It now plans to build its Prius hybrid at a factory under construction in Mississippi from 2010 instead of the Highlander SUV.

Despite the US market being much weaker than anticipated due to weak housing prices and record high fuel costs, Toyota has so far not changed the forecast it issued last December for US sales of 2.64 million vehicles this year, up 1 percent from 2007.

Toyota's initial global sales plan called for sales at the group, which includes truck unit Hino Motors Ltd and minivehicle maker Daihatsu Motor Co, to grow 5 percent to 9.85 million vehicles this year.

The weak US market, which many now expect will total closer to 14 million vehicles this year, down from 16.1 million in 2007, has forced Toyota's rivals in Detroit into worse scenarios of factory closures and job cuts.

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