Toyota’s Japan & NA Sales Will Remain Weak in Short Term

Toyota Motor Corporation (NYSE:TM) results for 2011 Q1 has been hit hard by the tragic Japan earthquake and tsunami. Here we will look at the impact in 2011 Q1 on Toyota’s vehicles sales in Japan and North America, which are Toyota’s largest automobile markets. Toyota sells its vehicles mainly under three brands: Toyota, Lexus and Scion and competes globally with automakers like BMW (GR:BMW), GM (NYSE:GM), Ford (NYSE:F), Honda (NYSE:HMC), Daimler (ETR:DAI) and others.

Automobile sales in Japan and North America tank in the short-term

In 2011 Q1, Toyota witnessed its vehicle sales in Japan and North America declining by 37% and 12% respectively from its 2010 Q1 levels. This decrease was partially offset by Asian sales increasing by 23% year-on-year. We expect that Toyota’s automobile sales will continue to face increased pressure through 2011 and early next year due to disruption in global auto parts supply chain.

Sales expected to recover over the mid-term

Over the mid-term, we expect that Toyota’s sales will pick up on the back of new product innovation targeted at specific regions based on customer needs and local tastes.

Toyota’s strategy involves allocating its resources to both developed and emerging countries to develop a balanced product portfolio across all markets. For example, Toyota is focussing upon developing compact vehicles, SUVs, pickup trucks and other multi-purpose vehicles aimed at many emerging countries. Also, Toyota’s effort to expand its line-up of hybrid vehicles and develop plug-in hybrid vehicles, electric vehicles and fuel cell cars will help its market share recover.

You can drag the trend lines in the  modifiable charts above to see the impact of these trends on Toyota’s stock value.

See our full analysis for Toyota