Despite yen, Toyota expects export surge to N.A.
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TOKYO -- Toyota Motor Corp. is taking a beating from the yen's unfavorable exchange rate vs. the dollar, but that won't stop the company from ramping up exports from Japan this year.
Vehicle shipments to North America from Japan are forecast to surge 25 percent to 730,000 units in the fiscal year that began April 1, Toyota says in its latest earnings outlook.
That tally bounces back from a tepid 583,000 in the previous fiscal year, when Japan's March 11 earthquake broadsided exports.
But it also marks a 22 percent advance over 600,000 exports in the fiscal year before that, which ended March 31, 2011, when output in Japan was quake-crimped for only three weeks and the carmaker's sales were rapidly rebounding from its 2009-10 global recall crisis.
Corrosive yen rate
Raising exports from Japan is not a Japanese automaker's best option these days because of the yen's corrosive exchange rate. A dollar taken in sales in the United States now brings about ¥80 for the automaker vs. ¥90 or more two years ago.
Facing that reduction in revenue, a Japanese automaker has a choice: watch profits on Japan-made cars sold in the United States dwindle or raise prices to protect profits and risk becoming less competitive.
But Japan's biggest automaker has no other option as it chases a 26 percent increase in North American sales to 2.35 million units. With its assembly plants in the United States and Canada running near capacity, it needs imports from Japan -- especially of the hot-selling family of Prius hybrids, all of which are made in Japan -- to hit its target.
An expected surge in sales of Lexus vehicles, which are mostly made in Japan, will further propel the export boom.
Despite the forecast increase in exports, Japan-made cars should account for a smaller portion of sales in North America: 30 percent vs. 31 percent last year.
But the percentage of made-in-Japan cars would still be up from the year that ended March 31, 2011, when it was just under 30 percent.
Toyota, which exports a much larger percentage of its Japan-made cars than rivals Nissan Motor Co. and Honda Motor Co., wants to make more cars overseas, but the shift is happening slowly.
Shigeki Terashi, president of Toyota Motor North America, said recently that any vehicle sold in large volumes in the United States will be assembled solely in North America.
Exposed
But that could take years. And in the meantime, Toyota remains dangerously exposed to fluctuating exchange rates. In the fiscal year that ended March 31, 2012, currency losses lopped ¥250 billion, or $3.04 billion, from Toyota's operating profit.
Complicating efforts: President Akio Toyoda's commitment to keeping production capacity of at least 3 million units a year in Japan, partly from a sense of duty to the country's economy.
Toyota aims to make 3.4 million vehicles in Japan this fiscal year, even though it expects domestic sales of only 1.55 million.
Roughly 60 percent of its local production would be exported.
"We have this special mentality or principle of maintaining this production in Japan. This is not just a simple emotional reaction," Toyoda said at this month's earnings press conference.
Part of the equation, he insisted, is maintaining a critical mass of manufacturing to back up local r&d efforts and to serve as a base of expertise for overseas expansion.
"This requires us to sustain a certain level of production in Japan," Toyoda said. "We need a certain volume, like 3 million, which would allow us to maintain and grow these skill sets."
| Toyota's North American forecast | ||||
| Fiscal 2011* | Fiscal 2012* | Fiscal 2013* est. | Increase vs. fiscal 2012 | |
| Imports | ||||
| from Japan | 600,000 | 583,000 | 730,000 | 25% |
| Total N.A. sales | 2,031,000 | 1,872,000 | 2,350,000 | 26% |
| *Fiscal year ending March 31; numbers are units | ||||
| Source: Toyota Motor Corp. | ||||
You can reach Hans Greimel at hgreimel@crain.com. -- Follow Hans on 
