Section 5. Latin America, Africa, and Middle East
Item 1. Responding to Market Growth and Expansion
Trends in Latin America
In terms of the trends in each country and region, Brazil, the largest market in Latin America, experienced a stagnating economy in the late 1990s due to the effects of the international financial uncertainty at the time. Consequently, the demand for cars also remained sluggish from 1998 through 2004. Later, thanks to robust exports of industrial and agricultural products, sales of cars began to grow. Toyota's sales in Brazil exceeded 20,000 vehicles in 2000, 50,000 in 2004, and 72,000 in 2007.
In Argentina, meanwhile, the economy fell into crisis and the government stopped making payments on its foreign debt in 2001. Consequently, the automotive market, which had stayed between 300,000 and 400,000 vehicles in the second half of the 1990s, fell to slightly above 100,000 in 2002. Toyota's sales volume shrank dramatically from 13,000 vehicles in 1998 to around 5,000 in 2002, exacerbated by the fact that the Hilux model, which had been the mainstay, was nearing the end of its model cycle.
Subsequently, factors such as steep rises in global grain prices helped the Argentinean economy recover quickly and demand for cars also regained traction, reaching the historical high of 573,000 vehicles in 2007. Toyota's sales also recovered, reaching a record level of 17,000 in 2005 and a higher record level of 29,000 in 2007, thanks to robust sales of the Hilux and the Brazilian-made Corolla.
The Venezuelan car market alternately shrunk and expanded beginning in the late 1990s, greatly affected by fluctuations in the price of crude oil. However, the market continued to expand from 2004 to 2007, helping TMC increase its sales from 6,000 vehicles in 2003 to 54,000 in 2007.
In Mexico, where Toyota had been absent for nearly 40 years since ceasing business in the country in 1964, TMC resumed operations there by establishing Toyota Motor Sales de Mexico S. de R.L. de C.V. (TMEX) in 2001, for selling and servicing Toyota vehicles. Taking advantage of NAFTA, Toyota first began introducing cars made in North America, such as the Corolla and Camry. Then, utilizing the tariff-free arrangement based on the automotive agreement between Mexico and Argentina, Toyota began importing and selling the Argentinean-made Hilux in 2003 and the IMV (Innovative International Multi-purpose Vehicle) in 2006. In addition, as the 2005 Economic Partnership Agreement between Japan and Mexico went into effect, Toyota enhanced its product lineup in the Mexican market by increasing the number of vehicles imported from Japan. As a result, Toyota's sales reached 66,000 vehicles in 2007.
Toyota continued to increase its sales volume in the Latin American market through 2007. Sales volume shrank due to the impact of the Lehman Brothers bankruptcy and the foreign currency issues in Venezuela, but sales volumes are now in recovery mode after bottoming out in 2009.