Toyota sales in Europe are being powered by its hybrid range. Pictured here is the company's plant in the UK. Image Credit: Bloomberg

Tokyo (Bloomberg): Toyota Motor Corp. isn’t letting a global slowdown get in the way of its plans to grow, reporting a higher-than-expected quarterly profit and raising its full-year forecast.

Even as a production shutdown in China, the largest car market, has cast a pall over global automakers already struggling to cope with a downshift in demand and rising costs on next-generation technology, Toyota is betting it can sell more cars.

“The global market in 2020 will be probably lower than what was the market in 2019,” Didier Leroy, executive vice-president, said. “But you saw our forecast in terms of sales volume for 2020 and we plan to sell more cars than in 2019 - even if the market is declining.”

Europe provides growth engine

Despite softening sales volumes in Japan, North America and China, Toyota benefited from steady growth in Europe, where hybrid gas-electric vehicles accounted for 52 per cent of its sales last year. Profit margin in the region climbed in the latest quarter to 4.6 per cent from 3.2 per cent a year ago.

“Hybrid vehicles are chosen by more than half of our customers and this has boosted our overall sales in Europe,” Leroy said.

That has given a boost to the company’s mainstream Toyota brand - sales of which last year exceeded 1 million vehicles for the first time since 2008 - and helped its Lexus luxury brand post a double-digit sales growth.

It’s RAV4 all the way

In North America, operating profit rose nearly four times to 105.9 billion yen. That came despite a 2 per cent slide in sales volume to 668,000.

Officials attributed that profit surge to a number of factors, including a shift in production toward more light trucks such as sport utility vehicles and pickups. The company has been reworking its manufacturing footprint in the US to crank out more SUVs such as its best-selling RAV4 and popular mid-size Highlander and cope with slow sales of sedans like its Camry model.

“The US Highlander is fresh while RAV4 is very strong,” said Tatsuo Yoshida, senior auto analyst at Bloomberg Intelligence.

Just under 9 million

Toyota expects its global sales volume for the fiscal year to hit 8.95 million vehicles. Including group companies, it sold 10.7 million vehicles last calendar year, second only to Volkswagen AG’s 10.9 million. GM sold 8.4 million vehicles last year and Ford shipped about 5.4 million.

One wild card is the impact from the production shutdown in China due to the spread of a deadly virus. Toyota said late last month it would extend a planned work stoppage at its Chinese factories until at least February 9.

Japan’s largest automaker said its profit forecast doesn’t take the shutdown into account and that it is still assessing the likely impact on its earnings and global supply chain from a protracted work stoppage.

“The impact of this new additional problem is really unclear at this stage,” Leroy said.

Something to aim for - the Lexus LS650hl catches the eye at a showroom in Tokyo. Image Credit: AP

Dented in Japan on volumes

Toyota said sales in its home market were hit hard by an October sales tax hike, with income and sales declining in the latest quarter. But Japan is still its most lucrative market, where it earned more than 400 billion yen in profit and boasted margins topping 10 per cent.