The world's largest carmaker, Toyota (TM, Financial), is headed for a better 2014. Toyota has an ambitious plan to extend its lead over the other automakers despite facing certain issues like product recalls. The company will be introducing new models in the future as it focuses on keeping its momentum going in the U.S. market. Toyota is also looking to profit from emerging markets with its budget models.
Hydrogen car
Toyota is all set to introduce new hydrogen car. This range is set to hit the showrooms by the end of the next year. If sources are to be believed, the car is to be named "Mirai", a Japanese word meaning “future.” The car is going to be expensive and may be priced at a whopping 7 million yen ($ 68,000). It is an electric car.
Plans ahead
Toyota understands that environmental friendly cars are the necessity nowadays. By the end of 2015, Toyota plans to present 15 new or improved hybrid vehicles that will help the company to satisfy varying consumers' tastes and needs.
Toyota's main markets are Japan, U.S. and Europe. The company plans to expand into the emerging markets. Toyota is spending significantly in Indonesia, India and Brazil to boost production. By 2015, Toyota plans to generate 50% of its revenue from emerging markets, a 5% increase from 2011. Toyota Europe expects to sell 865,000 units this year and increase its market share to 4.8 percent as the European car market enters what is expected to be a slow recovery from six years of contraction.
Didier Leroy, the head of Toyota Europe, told reporters that hybrid cars have been attracting new customers with the addition of the smaller Yaris hybrid and sportier Auris, beyond the original Prius models.
Emerging markets look promising
The Asian countries, especially China and India, are expected to account for 40% of growth in the auto industry over the next five to seven years. China is the biggest and fastest-growing auto market in the world in terms of number of vehicles sold. In 2013, it became the first nation to surpass domestic sales of 20 million units. As per a recent study conducted by the KPMG, the Chinese market will continue to expand considerably, and it is expected to account for 30% of global automotive sales by 2020 alone.
China leads the world automotive market followed by the U.S. and Japan. India, which currently is the sixth-largest automobile market, will account for more than 5% of the global vehicle sales by 2016, IHS said. India will also become the world’s fourth-largest producer of automobiles by 2020, after China, the U.S. and Japan, it said.
Managing director of Toyota India, Naomi Ishii, counts the Indian subcontinent as one of the important target markets, saying, "The entry of Lexus in India is only a matter of time." The premium car segment in India expanded 15% year over year in 2013, according to the Confederation of Indian Industry and Indian researcher IMRB International, and is expected to keep growing at the same rate.
The auto industry is recovering
The automobile market recovered significantly in 2013 from the impact of the global financial crisis, buoyed by economic recovery and pent-up demand in the U.S. and Asia. 2013 was a good year for the auto industry. Global auto sales have crossed the 80 million vehicles threshold for the first time in the past year. Imagine a market that is set to grow at a CAGR of over 30% for the next five years, and to reach over $130 billion. This is the forecast for the connected car market, and these numbers are looking more and more achievable.
Like 2013, 2014 is also expected to be a good year for automakers. Across the globe, countries are beginning to recover from the financial crisis, grow GDP and invest in infrastructure. Furthermore, banks are offering more car loans with lower interest rates. Consumers are taking advantage of low lease rates and inexpensive financing, which continues a shift from buying used to buying new.
To end
Toyota is the leading manufacturer of hybrid vehicles. In recent years, demand for Toyota's Prius hybrid car is strong due to high gasoline prices. Hybrid cars emit less CO2 emission. Nowadays customers are more willing to buy hybrid cars because they are more aware of the negative effects (air pollution) caused by cars. Other automakers are trying to bring more hybrid cars to the market, but customers are not much impressed with the U.S. hybrid technology as they are with that of Toyota models.
There is an ever increasing competition in the auto industry. Toyota's strong reputation and continual innovative culture will allow the company to grow in the future. Investors interested in auto stock should consider Toyota. In my opinion, Toyota will provide its shareholders with nice, steady returns over the next few years.
