TOKYO -- Toyota Motor Corp. cut its full-year North American sales forecast last week, citing doubts about the economic recovery, and is considering price increases to offset the rising yen.
Toyota now expects to sell 2.09 million vehicles in its biggest market during the fiscal year ending March 31, 2011, down from an earlier projection of 2.17 million.
The new forecast would be a small decrease from last year's sales of 2.098 million vehicles in North America, the company said while announcing quarterly earnings.
The tempered outlook comes despite a near fivefold increase in net income in the quarter ended Sept. 30 and improved forecasts for full-year net income and operating profits.
Executive Vice President Yukitoshi Funo said the company has felt some impact from the quality crisis that has led to more than 15 million vehicles recalled worldwide since last fall. But he blamed North America's downward sales revision on the torpid recovery of the U.S. economy.
"The economy is taking time, and the recovery is very slow," Funo said. "The passenger car market remains quite soft, and these conditions are likely to remain for some time to come."
The world's biggest automaker also is getting hammered by the yen's surge in value against the dollar, which undercuts profits repatriated to Japan. Toyota may raise prices to help offset the ¥320 billion, ($3.97 billion) hit it is expecting in foreign exchange losses this year.
"Raising prices is very difficult, but we are considering it," Funo said.
Boosting stickers in the United States would be difficult for several reasons, he said.
Because the economy is bad, people are unwilling to accept price increases. At the same time, Toyota faces increased competition from German and Korean brands, which are under less pressure to raise prices because their home currencies have stayed more stable against the dollar.
Funo said confidence in the carmaker has mostly recovered from the lows of earlier this year at the height of its global recall crisis. As proof, he pointed to Lexus' position as the top-selling luxury brand in October, though incentives buoyed the results.
Toyota brand sales fell 7 percent in October, while Lexus sales rose 8 percent.
"It's wrong to say there has been no impact from the recalls," Funo said. "But customer confidence and trust has largely recovered."
Outside the United States, Toyota's outlook is much rosier. The carmaker lifted its global sales forecast to 7.41 million vehicles, from an earlier goal of 7.38 million.
Toyota also raised its guidance for full-year operating profit and net income. It now sees net income at ¥350.0 billion, or about $4.33 billion, compared with a previous forecast of $4.20 billion. Last year it reported net income of $2.59 billion.