Toyota to spice up old Corolla to keep market lead

Car producer to launch new version of the model as it tries to retain global sales crown

PUBLISHED : Thursday, 31 January, 2013, 12:00am
UPDATED : Thursday, 31 January, 2013, 5:20am

With Toyota Motor back on top as the world's largest vehicle maker, president Akio Toyoda is not looking to a relative youngster like the Prius hybrid to defend that lead. Instead, he is counting on a middle-aged veteran: the 47-year-old Corolla.

Later this year - it has not said when or where - Toyota plans to introduce a revamped version of its global best-seller, which last underwent a redesign in 2008.

No launch is more consequential for Toyota this year as the Prius is not due for a major change until 2014 and a new Camry car came out only about a year ago.

For Toyoda, the compact will be a chance to build on pledges to make cars that are more fun to drive and shed some of the company's reputation for blandness.

More relevant for investors, the success of the top-selling car in history will help determine Toyota's ability to return to the profitability it enjoyed before the global financial crisis and the recall of millions of vehicles.

The Corolla "might be viewed as boring by some, but for others it's bulletproof," said Kurt Sanger, an analyst at Deutsche Bank, who has a buy rating on Toyota stock. "The profit per unit might be lower than other models, but if you sell that many, you're going to make money."

Sanger is optimistic over Toyota's money-making prospects. He is among a dozen analysts tracked by Bloomberg who have raised earnings estimates for the vehicle maker in the past month as the tumbling yen raises the value of Japanese exports.

The yen hit 91.26 to the US dollar on Monday, the weakest since June 2010. Toyota's annual operating profit gains by 35 billion yen (HK$2.97 billion) for every one-yen drop in the value of the Japanese currency against the dollar.

Toyota has sold more than 40 million Corollas over the years. Although the car remained its top seller last year - estimated by the company at 1.21 million deliveries worldwide - Corolla sales have fallen from a peak of 1.42 million units in 2006 as Honda Motor's Civic and Hyundai Motor's Elantra won customers with fuel economy and lower prices.

The Civic overtook the Corolla as the best-selling compact sedan in the US last year, according to researcher Autodata.

This year, global sales of the Corolla will probably increase 7 per cent to 1.3 million units, according to Takeshi Miyao, an analyst with researcher Carnorama Japan.

The declining popularity of the Corolla has been mirrored in the company's earnings. Toyota's profit forecast for the fiscal year to end March is less than half the amount five years ago.