Toyota sees natural demand back in H2 2010

PARIS (Reuters) - The European car market will have to wait until the second half of 2010 for natural demand to return even though there are some signs of recovery now, Toyota Motor Europe's (7203.T) chief executive told the Reuters Auto Summit.

Tadashi Arashima said on Tuesday that Toyota would not achieve its previous target of 6 percent market share in Europe this year, which had proved to be "probably too optimistic, too ambitious" and for next year would hope to be close to the level of 5.3 percent it achieved in 2008.

"We actually lost share in France and in Italy. For next year, we want to go back to at least last year's share -- 5.3 percent or even 5.5 percent," he told the summit, which is taking place November 2 to 5 at Reuters' offices in Paris and Detroit.

However, he added: "we don't want to discount too much just for the sake of increasing volumes or running the factory. We want to have legitimate sales to consumers."

Arashima said that Toyota, the world's largest automaker, has had to deal with an unusual market in 2009.

"This year's market was so far from and so different from what we expected, with scrappage schemes and other things, like a strike at our French factory," Arashima said.

Governments stepped in to help carmakers pummeled last year by a profound sales crisis, introducing scrapping incentive schemes that pay drivers to trade in old cars for new models.

"We see some good signs in Western European countries. But the fundamental economy is not strong yet," Arashima said.

"Natural demand will not come back until the second half of 2010. Hopefully then we will see a slow upward trend <in sales> but it depends on how the scrappage schemes will continue," he said.

"Unemployment is still rising, so I don't see consumer confidence coming back now. Perhaps this will change in the second half of 2010 if employment stabilizes or comes back and people start spending a bit more on pricey items."

Arashima noted that parts of eastern Europe were still in deep recession and said he did not expect it to recover as quickly as western Europe.

Arashima said Toyota had a tentative sales target of 30,000 units per full year for the Auris hybrid hatchback, its first European-built hatchback, which the group will launch in the second half of 2010.

He said the company had not yet decided where it would go on sale first, but that the United Kingdom, where it will be built and where hybrids have proved popular, would be a likely candidate.

"Hybrid sales vary so much by country to country depending on incentives and consumers' mindset on the environment. I see great potential in the U.K., Sweden, Netherlands and maybe in France, while not so much in Italy or Spain."

(Additional reporting by Gilles Guillaume, Christiaan Hetzner, Marcel Michelson and Lionel Laurent; editing and Karen Foster)