Toyota Motor’s slower-than-expected growth in Southeast Asia, its third biggest regional market, is becoming a headache as the world’s best-selling carmaker closes on its six-year-old profit record. In ASEAN - the biggest market for Toyota after North America and Japan, overwhelming Europe or China - the company has been hurt by government policy swings in Thailand and Indonesia and underperformed industry-wide growth. In Southeast Asia’s biggest car market Thailand, Toyota sold around 237,000 vehicles in January-June, down 2 per cent from the same period a year ago. That compared to an industry-wide growth of 22 per cent, as it was hit by the end of a government subsidy as well as weakness in fuel-efficient small cars. In Indonesia, Toyota’s vehicle sales are likely to have increased year-on-year in the first half of this year, but at a considerably slower pace than the market as customers hold off purchases ahead of an expected launch of a new small car. Toyota’s ASEAN exposure is higher than its rivals Honda Motor and Nissan Motor. ASEAN represents a little more than 10 per cent of Toyota’s total global sales. Globally, Toyota has posted a 5.4 per cent rise in its biggest regional market North America in January-June as the United States is seeing the strongest pace of annual sales in more than five years. In Japan, its second largest market, sales dropped 12 per cent year-on-year after green car subsidies ended last year, but it is seeing strong sales of profitable luxury models. Toyota, which is expected to this year become the first automaker to produce more than 10 million vehicles in a year, had been on track to hit or get near its record annual operating profit this financial year. But its Southeast Asian markets could get in the way. “In the short term, sales are lower than expected in these countries and that could weigh on Toyota’s business performance,” said Issei Takahashi, an analyst at Credit Suisse in Tokyo. At the same time, export dependent Southeast Asian countries are bracing for a slowdown after years of easy credit, buoyant consumer demand and strong domestic investment. The US Federal Reserve is expected to soon start tapering its stimulus programme that has fuelled the surge of credit in the region. A weakening yen that makes exports profitable and lets it convert money made overseas at a favourable rate have set Toyota nicely to boost its performance. On Friday, it is expected to post an April-June operating profit of 649 billion yen (HK$51.0 billion), up 84 per cent year-on-year, according to the average estimate of four analysts surveyed by Thomson Reuters I/B/E/S. That would be the biggest quarterly operating profit in six years and just shy of its record, in April-June 2007, of US$6.9 billion, or 675.4 billion yen, and is stronger than Volkswagen’s group April-June operating profit of US$4.5 billion and General Motors’ US$1.8 billion. For the financial year ending March next year, Toyota is likely to post an annual operating profit of US$23.1 billion or 2.27 trillion yen according to an average of 26 analyst forecasts, nearing its record profit of 2.27 trillion yen it booked in the year ended March 2008. Toyota, whose Thai market share dropped to about 32 per cent in January-June from around 36 per cent last year, last month cut its this year sales forecast for the market by 10 per cent to 450,000 vehicles, despite having raised its outlook for industry-wide sales by 8 per cent to 1.3 million vehicles. Toyota lags rivals in small, fuel-efficient cars that are increasingly popular in Thailand. Rival Honda has seen strong sales of the Brio Amaze in Thailand. Toyota has said it plans to sell a new model later this year. In Indonesia, where Toyota holds a 35 per cent share, it has been hit by a delay in the implementation of the government’s Low Cost Green Car Programme to promote small cars, which was recently signed into law but is still on hold pending review. The government also rolled back fuel subsidies in June.