DETROIT (Reuters) - The public isn’t cutting Toyota Motor (7203.T) much slack, but the world’s top automaker is looking to shake off the recall crisis and at least match the growth in its key U.S. market this year in what could bode well for its lusterless shares.
Almost exactly one year since its worst safety crisis erupted, Toyota executives at the Detroit auto show this week downplayed the company’s poor performance in the U.S. last year, saying the pieces were in place for a healthy recovery.
Toyota was the only automaker to post a sales decline last year, dropping 1.8 points of U.S. market share to 15.2 percent as it began 2010 with a month-long sales and production halt to clean up after a debilitating series of recalls.
Attending his first U.S. auto show ever and facing a U.S. audience for the first time since appearing on Larry King Live last February, President Akio Toyoda conceded that 2010 was a tough year but steered journalists’ attention toward the achievements made against the odds last year.
“Despite the fact that the past year was an extremely trying year, our dealers actually left us an outstanding performance by achieving No. 1 selling car with Camry, maintaining Toyota as the No. 1 retail brand, with Lexus also being the No. 1 luxury brand,” Toyoda told reporters in Detroit this week.
Toyota’s U.S. sales, including those to rental car companies and other fleet customers, fell 0.4 percent in 2010, but sales to individual consumers rose 0.4 percent, the company said.
“I think the short-term damage (from the recalls) was big ... (but) we were able to learn so much over the past year, including where we need to listen to customers more,” Toyoda said.
Toyota has forecast sales growth of 9 percent to 1.90 million vehicles in the United States this year fueled by 10 new models including the Camry. It will also add a small Prius minivan, unveiled at the Detroit auto show this week.
But competition promises to be stiff, as locals General Motors Co (GM.N) and Ford Motor Co (F.N) beef up their small-car lineup in a segment traditionally dominated by Japanese automakers. Hyundai Motor Co (005380.KS) will also continue to nip at Toyota’s heels as South Korea’s top car maker seeks to close the brand image gap and eat into its sales.
A few say Toyota may continue to suffer the lingering effects of the recall of over 10 million vehicles in the United States since late 2009, mostly to address unintended acceleration.
“It’s still going to take a while for them to come back,” said David Champion, senior director at Consumer Reports, which publishes influential ratings for automobiles.
“They are not the dominant one they used to be in terms of quality and consumer perception,” he said.
Toyota fell to a statistical tie with Ford for a top ranking in the magazine’s survey last year, although 17 of its vehicles were rated “most reliable,” the most of any make.
Analysts said investors have largely -- if not completely -- gotten past the recall story and seem to be itching to return to Toyota shares, although the vote is split on whether they should.
“I have many investors now asking me, ‘When should I start buying Toyota?,'” UBS Securities analyst Tatsuo Yoshida said.
“That’s not my call, but I tell them that the news flow should start to look good around summer, when the U.S. market’s sales numbers start rising.”
Toyota’s shares were the worst performer among Japanese automakers in the past year, falling 13 percent, while Tokyo’s transport sector subindex .ITEQP.T lost 0.7 percent. Toyota’s shares closed at 3,500 yen on Wednesday, up 1.3 percent.
“The worst of it has definitely passed,” BNP Paribas auto analyst Andrew Phillips said. “The big story that everyone wants to talk about now is how wonderfully the Big Three are bouncing back. Well, GM’s market share was down last year, but that’s the story people want to sell.”
Phillips said Toyota’s sales growth should be dramatic in the first few months of 2011 as they come off last year’s low base.
For the full year, UBS’s Yoshida said Toyota had a good chance of boosting its U.S. market share following a year of virtually no new model launches.
While growth in the United States is expected to drive Toyota’s earnings up further in the business year starting in April, some say the yen’s persistent strength and the ensuing drag on domestic earnings may yet keep investors away.
“We think it will be a while yet before the market reassesses the stock, reflecting the lack of near-term solutions to slumping domestic earnings,” Goldman Sachs auto analyst Kota Yuzawa wrote in a recent report, keeping his “Neutral” rating on the stock. Yuzawa has a “Buy” rating on Honda and Nissan.
Additional reporting by Bernie Woodall; Editing by Phil Berlowitz