Toyota Expects Better Sales in Europe - Analyst Blog

Toyota Motor Corp. (TM) expects vehicle sales of around 865,000 units in Europe this year, Didier Leroy, the head of its European operations revealed in a media conference in Geneva. This reflects a significant sales growth from 847,530 vehicles sold last year. The optimism is based on the steady recovery of the European market and the popularity of Toyota’s hybrid models.

In addition to the increase in sales, Toyota expects its market share on the continent to increase from 4.7% recorded in 2013. Toyota also targets 1 million sales in Europe by 2015. However, the automaker revealed that it will not compromise on profitability to meet the sales target.

The improved sales and market share are expected to be driven by new model introductions by Toyota, cost saving strategies and the rising demand for hybrid vehicles.

Toyota expects growth in the European market to be mainly driven by the enhanced performance in the western region. Meanwhile, the company’s performance in the central and eastern European regions is expected to remain stable.

Toyota sells vehicles in 56 countries in the European market, including Israel and Russia. The company’s profitability faces risks from the weakness of the Russian ruble and the Turkish lira. The automaker is also keeping an eye on the situation in Ukraine and Russia, where it sold 16,000 and 172,000 vehicles, respectively, last year.

While the tsunami in Japan and safety issues in the U.S. affected results in those regions, Toyota laid emphasis on restructuring its operations in Europe to enhance profitability. In 2013, Toyota sold 156,000 hybrids in Europe which is about 20% of the total hybrid sales. Its Yaris and Auris models were widely accepted in the region owing to the traditional designs and suitable pricing, thus boosting hybrids sales.

Currently, Toyota carries a Zacks Rank #1 (Strong Buy). Some other automobile stocks worth considering are Tata Motors Ltd (TTM), Daimler AG (DDAIF) and Dongfeng Motor Group (DNFGY). Tata Motors and Daimler sport a Zacks Rank #1 (Strong Buy) while Dongfeng Motor carries a Zacks Rank #2 (Buy).

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