Toyota pushes back U.S. plans for Prius

STAN HONDA/AFP/GETTY IMAGES

Toyota has pushed back U.S. production of the Prius, shown here at the New York International Auto Show in March, for at least six years.

Toyota Motor Corp has pushed back plans to build its Prius in the United States by as much as six years, with a top executive saying U.S. production is likely to start only when the best-selling hybrid is remodeled.

The world’s largest auto maker had previously planned to produce the Prius at its new Mississippi plant but had put those plans on hold indefinitely as the financial crisis hit demand.

Of concern to Toyota is the pace of recovery in the U.S. market, which Executive Vice President Atsushi Niimi said would likely be slow.

“If you look at unemployment, housing, and other economic indicators, there’s not much good news. I think it will take time for the market to recover,” he said, adding he did not share views that the U.S. market could recover to above 12 million units next year or to 14-15 million in 2012.

A slower-than-expected pickup in U.S. car sales has become a major worry for Japan’s top automakers, which traditionally make the lion’s share of their profits in North America.

Toyota also faces the urgent task of cutting costs and boosting manufacturing efficiencies in Japan, where it has enough facilities to build 3.9 million vehicles annually, compared with actual output of 3.2 million last year.

Toyota’s production in Japan has soared over the past year, recovering from post-financial crisis levels with the help of generous government subsidies and tax incentives on fuel-efficient models.

But one of those schemes, providing subsidies to replace cars 13 years or older, ends in September and automakers expect demand to shrink in Japan in the second half of the business year. Toyota is expected to be hit the most because the Prius and other hybrids enjoyed the biggest perks.

U.S. sales of cars, trucks hit stride

Sales of cars and trucks in the United States in July are on track to reach their best pace since last August when vehicle sales were boosted by the federal government’s cash-for-clunkers incentive program.

Dealers and analysts say consumers appear to be returning to dealerships even though overall economic trends remain mixed and manufacturers only modestly increased incentives.

In July, the seasonally adjusted annual rate is estimated to be 11.8 million, according to vehicle pricing website TrueCar.com, or 12.2 million, according to J.D. Power and Associates. Those estimates would make July the strongest selling month since last August, when government incentives boosted the selling rate to 14.9 million.

“The actual retail demand has been quite strong in July, and that happened without incentive spending going up,” said Jesse Toprak, vice president of industry trends for researcher TrueCar.com. “It seemed like there was a lot of pent-up demand.”

Toprak estimates that General Motors, which emerged from bankruptcy last July, will report a 23.2 percent sales gain this July, the largest increase among major automakers.

He expects sales to increase 8.4 percent at Ford and 1.3 percent at Chrysler. Toyota, still dealing with fallout from its recalls for sudden acceleration, is expected to report a 4.4 percent sales decline. Sales may increase 4.0 percent for Honda, 4.5 percent for Nissan and 14.2 percent for Hyundai.

When 2010 began, automakers expected industry sales to increase modestly throughout the year as the economy recovered. And for the first six months of this year, sales of cars and trucks increased 16.7 per cent.

But in June, the rate of sales slowed, job losses increased and consumer confidence fell, prompting many in the industry, including Ford, to trim their forecasts for the year. Now, July’s sales trends are providing renewed hope.

“This month is looking better than June,” Ford CFO Lewis Booth said. “It looks like the retail market is up. It makes us think that maybe June was the aberration.”

Peugeot Citroen predicts second-half problems

French carmaker PSA Peugeot Citroen has warned that the economic environment will be tougher in the second half, sending its shares lower after recent gains even though it swung to a first-half profit. PSA shares had risen 24 per cent in July before Wednesday’s drop.

“The economic context had a positive impact in the first half. Clearly the economic context is going to be less favourable, and will have a negative impact in the second half,” Chief Executive Philippe Varin said.

Barclays Capital analysts feared the second half may be even worse than the company predicted. Despite PSA’s good model lineup and accelerated cost-savings compared with what it had planned, “we remain more cautious than the company on the outlook for H2 2010,” they wrote in a research note.

Morgan Stanley analysts said next year was a worry, too.

“We believe consensus wrongly assumes a linear recovery for PSA in 2010-12 – we see earnings falling in 2011,” they said.

Talks continued about paying back a third of the 3 billion euro loan that PSA, like rival Renault, received from the French government to help it through the crisis, the company said.

BMW to enter Minis in world rallies

Minis will return to the World Rally Championship starting next year, German automaker BMW announced this week.

BMW, which pulled out of Formula One last year due to the global economic crisis, plans for Minis to compete in “selected rounds” of the 2011 championship before contesting the entire 2012 season.

BMW said it plans to be involved in the sport for “several years.”

British company Prodrive has been developing the Mini Countryman WRC since 2009, having overseen Subaru’s WRC program between 1989 and 2008.

Prodrive chairman David Richards said the Mini Cooper S “captured the imagination of the world” in the 1960s, winning the Monte Carlo Rally three times as well as the European Championship in 1965.

“The tiny car took on the might of V8 powered Fords and won what was then one of the toughest motor sport events, the 4,000-kilometre Monte Carlo Rally,” Richards said.

“I believe our new Mini will become a firm favourite of the latest generation of rally fans, just as it is adored by its millions of owners across the world.”

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