Toyota dreams of green car future, but tied to gas-guzzler present

Sun Aug 3, 2014 5:27pm EDT
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By Yoko Kubota

TOKYO (Reuters) - Toyota Motor Corp (7203.T: Quote) is hitching its future to green cars, investing billions of dollars in gasoline-electric hybrids and fuel-cell vehicles, but for now its record profit performance is being powered largely by a gas-guzzling U.S. market.

In the United States, relatively cheap gasoline prices helped to spur brisk 9 percent growth in industry-wide light truck sales in the first half of the year, making that one of the fastest-growing major global market segments - accounting for about one-tenth of global vehicle sales.

Toyota outperformed the overall U.S. market, moreover, with its fresh model line-up - the Highlander SUV was redesigned in February and the Tundra pick-up got a facelift last September - powering a 10 percent rise in its January-June U.S. light truck sales to nearly half a million vehicles.

That success is feeding the nearly $40 billion cash pile that Toyota will tap for future green car investments.

"The U.S. is one of the few bright spots contributing to year-on-year profit growth for Toyota while it faces a slowdown in places like Japan and Thailand," said Koichi Sugimoto, an auto analyst at Mitsubishi UFJ Morgan Stanley.

Light trucks, a category that includes SUVs, accounted for around 42 percent of Toyota's total U.S. sales in January-June, which were up 5 percent from a year earlier.

The strong showing continued in July, when Toyota's total U.S. sales rose 12 percent due to robust SUV demand and larger discounts, outperforming the industry's 9 percent growth and surpassing Ford Motor Co (F.N: Quote) to become the No.2 seller for the month.

Analysts forecast that Toyota's April-June North American operating profit jumped at a double-digit rate from the same period a year ago, with Barclays auto analyst Tatsuo Yoshida putting the figure at 106 billion yen ($1.03 billion), up 30 percent year-on-year. The company will announce its first-quarter earnings on Tuesday.   Continued...

A Toyota logo is seen on a car inside a showroom at a Toyota dealership in Warsaw, in this April 11, 2014 file photo. REUTERS/Kacper Pempel/Files