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Toyota pins European profits on hybrid strengths

Bloomberg

Toyota Motor Corp., the world’s biggest carmaker, is targeting sales and profitability gains in Europe and Russia next year on the strength of its increasingly popular hybrid models.

The manufacturer’s plants in France, the U.K. and Turkey are at full capacity, putting the company on track for its European production to account for 75 percent of the cars it sells in the region by 2015, Didier Leroy, head of the Toyota Motor Europe division, said in an interview. The focus is on ensuring that strategy serves to boost earnings, he said.

“The real challenge for us is to be permanently asking ourselves whether we’re on track with profitable growth,” Leroy said at his office in Brussels. “There’s absolutely no doubt about the fact that we’ll be making more sales and profit next year than this.”

Toyota, which ranks 10th in car sales in Europe, boosted deliveries in the region by 6.9 percent in November, contributing to a car-market gain of 0.9 percent for the month, according to industry figures. Growth has been propelled by the gasoline-electric-powered Lexus IS sedan, as well as hybrid versions of the Yaris subcompact and Auris hatchback.

The combined car market of the European Union, Switzerland, Norway and Iceland is approaching its sixth annual contraction, declining 2.8 percent in the first 11 months of this year. Unlike U.S. competitors General Motors Co. and Ford Motor Co., Toyota is profitable in Europe, more than doubling operating profit to ¥20.1 billion in the quarter ended September from a year earlier.

“In 2008, Toyota Europe was losing money selling 1 million vehicles, while it made money last year with a volume of about 838,000 units,” Leroy said.

Hybrid models’ proportion of Toyota Europe’s sales has jumped to 20 percent this year from 13 percent in 2012, Leroy said. “We’ve never sold as many hybrids as we’re selling today,” he said. “If we fail in terms of profitability on these cars, we can’t move forward.”

The manufacturer’s 11-month European sales decline was less than half the pace of the industrywide drop, the regional carmakers lobby said Tuesday.

Toyota, already the biggest Asian carmaker in Europe, has no intention of getting into a race with Seoul-based Hyundai Motor Co. or Yokohama-based Nissan Motor Co. to maintain that ranking, Leroy said.

“It’s not a subject for us,” the executive said. “At Toyota’s executive committee, it’s never a subject. The key is to have profitable growth.”