Toyota worries more about bad winter than fiscal cliff
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The Toyota, Lexus and Scion brands should combine to pass the company's internal sales target of 2 million units this year. |
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LOS ANGELES -- Toyota Motor Sales is bullish on U.S. industry sales for 2013, despite the fiscal cliff prospect of tax hikes and deep government spending cuts.
"I am more concerned with a major snowstorm shutting down the Midwest or Northeast than anything happening in Washington having an effect on the market," said Bob Carter, Toyota senior vice president of automotive operations. "The market is showing too much strength right now."
Toyota predicts November sales will end with a 14.9 million seasonally adjusted annual rate of sales, with the calendar year ending slightly above 14.3 million units. Such a strong November, when the month is typically weak, shows signs of strong consumer demand, Carter said.
Although November will benefit from a bump in demand as consumers use insurance to replace vehicles damaged or scrapped during Hurricane Sandy, the month would be stronger than many summer months even without that incremental gain.
Toyota officially projects 2013 industry sales "in the upper 14s," but Carter thinks, "we can kiss 15 million next year."
What's more, most of the 2013 growth will come from retail sales, as fleet sales appear to have maxed out, Carter said.
"The market is going very well. Consumer confidence is heading in the right direction. The pent-up demand is real," Carter said.
There are 245 million cars on U.S. roads, but 20 percent of them are 16 years old or older, said Jim Lentz, CEO of Toyota Motor Sales. That bodes well for continued sales increases.
 | Carter: "We can kiss 15 million next year." |
The Toyota, Lexus and Scion brands should combine to pass the company's internal sales target of 2 million units this year. Carter did not set a U.S. volume target for next year, but said the redesign of five core Toyota products should considerably lift sales.
Those products are expected to be the Avalon, RAV4, Tundra, Highlander and Corolla, although Carter declined to confirm the timing of the rollout.
As for the fiscal cliff, while Toyota always does "scenario planning," Carter added, "that's not a prime scenario."
Lacey Plache, chief economist of auto researcher Edmunds.com, has said that auto demand would drop as much as 20 percent if Washington can't find a way to avoid the combination of tax hikes and spending cuts set to take effect at the end of the year.
Failure to avoid the fiscal cliff could reduce annual U.S. auto sales to 12 million to 13.5 million -- instead of the 15 million Edmunds is forecasting for next year, said Plache, who added that that outcome is unlikely.
Toyota believes it would have have an advantage in such a situation because it typically carries less inventory than most automakers.
"If the worst happens, which we don't see as a scenario, we have flexible manufacturing and can make adjustments. If the market slows down, we have a little bit of cushion," Carter said.
"If we go from 34 to 39 days' supply, it's not the end of the world," Carter said, then referring to his competition, "If someone goes from 90 to 95 days, that's more of a challenge."
Bloomberg contributed to this report.
You can reach Mark Rechtin at mrechtin@crain.com. -- Follow Mark on 
