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Sat, Jul 25, 2009 - Page 10 News List

Toyota faces tough road in North America: Inaba

CHALLENGING TIME: The new CEO of the auto giant’s US arm expects car sales to pick up in its next fiscal year and says Toyota could become No. 1 in the US

AFP , DETROIT, MICHIGAN

Vehicles sit on the parking lot of the New United Motor Manufacturing Inc (NUMMI) factory in Fremont, California, on Thursday. The plant’s future is up in the air.

PHOTO: BLOOMBERG

Toyota expects to lose money in North America even as it prepares to sell more cars in the US than a restructured General Motors, a senior executive said in Detroit.

Yoshimi Inaba, the new chairman and CEO of Toyota Motor Sales USA, said he hopes the company’s North American operations can return to profitability during its next fiscal year, which begins next April.

“It’s a challenge. I guess I’ve just set myself a very big goal,” he said during a meeting with reporters on Thursday. “Our strength is our ability to meet local needs. I don’t see how Toyota can be profitable again without being profitable in North America.”

Inaba said it is quite likely that Toyota could emerge as the top car seller in the US if the predictions that General Motors is destined to lose market share after shedding brands and downsizing operations prove accurate.

“Toyota tried very hard to become No. 1” globally as it doubled sales world wide in the last eight years, but is not actively working to surpass GM in the US, he said.

“It’s not that we want to be No. 1 [in the US], it’s because of how things worked out,” he said.

Inaba cautioned that Toyota’s rapid growth also came at a price, leaving it vulnerable when sales dropped simultaneously in the US, Japan and Western Europe. Inaba expressed confidence that the US market will recover from its current slump, but cautioned that it will take time.

“There is a little pulse in the market. The market can’t get any worse,” he said.

The fundamentals of the US economy — and its lack of sufficient public transportation — mean that auto sales will eventually return to their previous highs, he said.

“We can still be very excited about this market,” he said.

However, Inaba cautioned that Toyota is facing stiff competition from Hyundai, Ford and other automakers.

“We see what many, many of our competitors are doing,” Inaba said. “They are doing a good job of catching up.”

Toyota has not yet determined the fate of a California plant it ran as a joint venture with General Motors, he said.

GM announced plans to withdraw from New United Motor Manufacturing Inc as it restructured under bankruptcy protection.

“We are looking at the viability of NUMMI. There is a likelihood that we would not buy the rest of NUMMI [from GM],” Inaba said.

But it is not clear if Toyota will end up closing the plant, which employs more than 5,400 people and is Toyota’s only unionized plant in the US. The United Auto Workers union is negotiating to save the plant, but has not said whether it will offer Toyota the same concessions granted to the Detroit Big Three.

“There are a number of difficult and complex issues that we need to address before making any final decisions,” Inaba said.

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