Toyota cuts sales forecast

Toyota cuts sales forecast By Kingsley Wijayasinha

The Nation

Published on July 25, 2008







Carmaker predicts a dip in pickup sales this year as consumers hold back on purchases

Due to the sharp rise in diesel prices, automobile companies are starting to feel the pinch as customers hold back on purchases of pickups.

Toyota Motor Thailand (TMT), the country's largest auto-maker, said it would likely face a decline in domestic pickup sales this year.

TMT president Mitsuhiro Sonoda said the company has revised its sales forecast for the year.

"We plan to sell 111,000 passenger cars this year, equivalent to a 20-per-cent growth compared to last year and 165,000 pickup trucks, which is 5 per cent lower than last year," he said.

Sonoda said that despite the rise in fuel prices, demand for automobiles is still strong, but customers are delaying pickup purchases.

Passenger-car sales are increasing due to the popularity of E20 models as well as increased demand for small, fuel-efficient cars, he said.

However, the diesel-price shock is responsible for the plunge in pickup sales during the past two months.

Last month, one-tonne pickup sales in the Kingdom plunged 23.2 per cent to just 25,265 units.

Pickup users in the country are now considering options such as holding back purchases and replacing diesel engines with petrol engines in order to be able to migrate to gasohol or liquefied-petroleum gas.

But Sonoda said the situation would improve for pickups toward the end of the year.

"The situation will ease as consumers start to realise the benefits of diesel models," he said. "Customers will realise that for carrying loads, the diesel engine is the best choice due to its high torque and efficiency."

TMT predicts the popularity of petrol-powered passenger cars will increase in the future, but diesel-powered pickups will remain popular in the Thai market.

Thanks to its export programme, TMT is able to minimise the damage from the sales shrinkage. But if domestic sales continue to drop, it could hurt the company in the long term.

"This could be a problem not only for us but for the whole industry since manufacturers need to have a strong base in which to develop competitiveness, quality, etc," Sonoda said. "For example, at the moment the prices of raw materials are increasing and manufacturers need to rely on the domestic market to find ways of reducing cost."

Sonoda said other factors affecting pickup sales include the growing inflation rate, political situation and tight financing measures.

"We have been analysing, both internal and external factors and found out that the economic foundation is still strong for the Thai auto industry. There is higher demand and export growth for passenger cars, but for the pickup, which is our dominant product, we must find more markets and solve the 'diesel shock' situation," he said.

Meanwhile, TMT's executive board vice chairman Ninnart Chaitirapinyo said TMT is working with PTT in developing a biohydrogenated diesel (BHD) which could revolutionalise the pickup industry.

"BHD is made from vegetable or animal oil which is shot with hydrogen to become hydrocarbons, resulting in premium diesel," he said.

Ninnart said BHD, which has the same chemical composition as diesel, has higher quality than diesel fuel presently sold in the market due to its higher cethane level of 80. Regular diesels have a cethane level of 50.

"They offer better emission and bear the same production cost as normal diesel since they are produced in refineries, so there is no need for additional investment like regular biodiesel," he said. "The logistics are also the same as diesel, so it is very cost effective."

"The original plan for our joint BHD research is two years, but we have talked to PTT about speeding it up to one and a half years," Ninnart said.