September 26, 2012 / 10:08 PM / 6 years ago

Toyota cautiously aims to grow again in tough Europe

PARIS (Reuters) - Toyota Motor Corp (7203.T) is cautious about pushing too hard for expansion in Europe where it is easy to lose money, but still aims to boost sales in the region by 10,000 or more vehicles in 2012 from 822,000 a year ago, executives said.

A visitor is reflected in a Toyota Motor Corp's vehicle displayed at the company's showroom in Tokyo September 26, 2012. REUTERS/Yuriko Nakao

The Japanese automaker plans to expand market share slightly to 4.5 percent from last year’s 4.2 percent and bring that up to about 5 to 5.5 percent over the next five years, Didier Leroy, chief executive of Toyota Motor Europe, and Karl Schlicht, executive vice president, said on Wednesday.

The growth would come after four years of shrinking market share for Toyota in Europe and as car sales drop in the region.

“We have to run a sensible business, a profitable business. It’s very easy to lose money here in Europe, so we have to be careful and we want to go step by step,” Schlicht told reporters on the eve of the Paris auto show which begins on Thursday.

Europe is Toyota’s fourth-largest market, following North America, Asia and Japan.

Toyota has the biggest European presence among Japanese automakers but is still a relatively small player in the market dominated by seven Western brands including Volkswagen (VOWG_p.DE) and Renault (RENA.PA). It also faces aggressive South Korean rivals Hyundai Motor Co (005380.KS) and Kia Motors Corp (000270.KS).

The Japanese automaker, which has six vehicle assembly plants in the region including Turkey and Russia and three engine plants, aims to boost European sales to 1 million vehicles in 2015, including the Lexus brand cars, Leroy said.

Toyota’s sales and market share in Europe peaked in 2007 at 1.3 million vehicles and 5.6 percent share, but that was followed by an operating loss of 143 billion yen ($1.8 billion)in 2008-09 amid the global financial crisis and a rising yen.

The strong yen, which soared from around 120 to the dollar in 1997 to 77 per dollar five years later, makes it expensive for Japanese firms to export products.

While Toyota locally produces about 67 percent of its cars sold in Europe including the Yaris compact car and the Auris hatchback, it still imports much from Japan, including parts and engines used in the vehicles. For hybrid cars, most parts are imported from Japan, executives said.

In the future, Toyota wants to boost the local production rate to 75 percent for vehicles it sells in Europe, Leroy said.

Toyota’s European business has been profitable since 2010-11, owing to its financial services business. The company also wants to bring its struggling manufacturing operations in Europe back to profitability this financial year, which ends in March 2013, he said.

Toyota is trying to make maximum use of its plants in Europe, which have the capacity to produce 600,000 vehicles a year. It is investing $350 million to build in Britain the new Auris, which will be unveiled at the Paris auto show on Thursday, and to build the Corolla sedan in Turkey.

Toyota will also present the Corolla Verso hatchback at the auto show, while Lexus is unveiling a concept car, LF-CC, a hybrid coupe with a spindle-shaped grille, which it wants to turn into an iconic look for the brand. ($1 = 77.8800 Japanese yen)

Reporting by Yoko Kubota; editing by Matthew Lewis

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