Against a backdrop of steady demand in the domestic automotive market, Toyota is rebuilding its product strategy and sales channels to become even more competitive.
In fiscal 2005, the segment saw increases of 7.1% in consolidated revenues, to ¥17,113.5 billion, due to growth in production and vehicle sales. Operating income declined 4.4%, to ¥1,452.5 billion, as a result of the effect of currency exchange rate fluctuations, a decrease in gains recognized on transfer of substitutional portion of the employee pension fund to the government, and an increase in research and development expenses and other costs, which were partially offset by the benefits of growth in production and vehicle sales and cost reduction efforts.
In fiscal 2005, overall sales in Japan's automotive market of 5.82 million units were at roughly the same level as in the previous fiscal year. And, the market excluding minivehicles saw shipments remain firmly in the region of 4 million units, with 3.94 million vehicles sold. Although the size of Japan's automotive market is unlikely to change dramatically in the near term, we are confident that there is significant potential for market growth based on fullfledged economic recovery and the deployment of higher-value-added products that offer outstanding environmental and safety performance. Looking at Japan's market structure, in the past several years compact cars and highly useful minivans with three rows of seats have stimulated strong demand.
The Toyota Group, including Daihatsu Motor Co., Ltd., and Hino Motors, Ltd., grew domestic vehicle sales on a shipment basis for the third year in a row. As a result, the Group expanded its share of the domestic market including minivehicles to 41.1% while staking out its largest-ever share of the market excluding minivehicles—44.5%.
On the back of the recent popularity of compact cars and minivans, Toyota-brand vehicles, such as the Wish, the Passo, and the Alphard high-end minivan, have been selling well. And, we shipped more than 100,000 units of the Crown, thanks to a full model change of the luxury sedan in the previous year. Moreover, the mainstay Corolla was Japan's best-selling car for the second successive year, and the Prius hybrid vehicle continued to sell briskly. In addition, unit sales of Daihatsu-brand minivehicles and Hino-brand trucks were up.
|2004||June||Launch of the Passo compact car|
|July||Full remodeling of the Crown Majesta large-size sedan
Launch of the Porte new-concept vehicle
|September||Launch of the Isis midsize minivan|
|November||Launch of the Mark X midsize sedan|
|2005||February||Full remodeling of the Vitz next-generation compact car|
|March||Launches of the Harrier and the Kluger hybrid SUVs|
In domestic operations, Toyota's medium-term mission is to develop the competitive muscle to capture and hold a 45% share of the Japanese automotive market excluding minivehicles. To that end, in February 2003 we announced a revised product strategy and began reforming sales channels to reflect changing times. In May 2004, we consolidated domestic, Toyota-brand sales channels from five to four and defined the roles and targets of the remaining channels more clearly. Of those channels, the revitalized Netz channel—created by combining the former Netz and Vista channels—is steadily earning endorsement among the growing numbers of customers with distinctive values.
Further, August 2005 is slated for the Japanese premiere of the Lexus, which we aim to develop into a globally recognized prestige brand. Plans call for the unveiling of the GS and the SC in August, followed one month later by the IS, with the fourth model, the LS, launching in summer 2006. In the immediate future, we are looking to market between 50,000 and 60,000 Lexus vehicles annually.
Channel and Brand Reconstruction
Netz—A New Incarnation
Our reinvented Netz channel targets customers that value advanced, particular features. A love of fun and fashion unites Netz outlets' unique style, which is reflected in every aspect of operations from manufacturing through marketing. In the medium term, the channel aims to sell more than 600,000 vehicles a year through 1,600 dealers nationwide.