GENEVA (AP) — Toyota Europe will post for the first time in five years a profit from just its car business for the 2012 fiscal year thanks to cost-cutting and improved efficiency, the head of the regional division said on the eve of the Geneva Auto Show on Monday.
CEO Didier Leroy said the company has reduced headcount and realigned its manufacturing footprint, shifting models among plants, so that its production more closely matches demand -- one of the biggest issues hampering profits in the tightening European market.
Toyota increased unit sales in 56 European markets, extending into Russia and eastern Europe, to 838 million in 2012 from 822,000 in 2011, raising its market share to 4.5 percent from 4.3 percent in an overall down market, which Didier called positive "given the context in Europe." For the European Union alone, new car registrations were down 3 percent to 523,909, for a 4.2 percent market share.
On its way to a full-year profit also excluding financial services, which have been boosting earnings, Toyota Europe reported a 150 percent increase in profits in the first nine months of 2012 to €209 million ($271.85 million) from €77 million last year, on a 2.1 percent increase in revenues. Leroy said "considerable cost reductions" were the main contribution to profit.
He said he expected to continue to grow thanks to new model launches this year, including the new Rav 4 SUV on display in Geneva and the Auris Touring Sports hybrid wagon due out in June.
Hybrid sales are reaching a tipping point and is expected to hit 17 to 18 percent of sales in 2013, from 11 percent in 2011, said Karl Schlicht, executive vice president for sales.
"Hybrid is no longer a niche," Schlicht said.
Toyota has sold 5 million hybrids globally since 1997, 500,000 of those in Europe with sales in the region hitting 100,000 last year alone. Executives said demand for hybrid versions of the Yaris and Auris had far exceeded their expectations.
"Customers are much more open to hybrid technology," Leroy said.