Toyota reclaims world's top vehicle maker title

A Toyota showroom in the US Toyota's recovery has been boosted by a sharp rebound in sales in the US market

Japanese carmaker Toyota has regained its slot as the world's biggest vehicle maker, capping a year of a dramatic turnaround in its fortunes.

Toyota said it sold 9.75 million vehicles in 2012, a jump of more than 22% from a year earlier.

General Motors, which was the biggest vehicle maker in 2011, sold 9.29 million vehicles in 2012.

Toyota's sales in 2011 were hit by natural disasters in Japan and Thailand which hurt production at its factories.

However, Toyota, and other Japanese carmakers that were affected, have seen a steady recovery since then and have been regaining share in key markets such as the US.

"The last two years have been very difficult for Toyota," Vivek Vaidya, an auto analyst with Frost & Sullivan, told the BBC.

"The regaining of the top slot would definitely be heartening for the firm and is good news for its investors and share holders," he added.

Toyota's rivals also reported record numbers in vehicle sales for 2012.

Nissan Motor said it sold 4.94 million vehicles globally, up almost 6% from the previous year, while Honda Motor said it saw a jump of 19% from a year earlier, selling 3.82 million vehicles.

Profit boost?

Along with the natural disasters, Japanese carmakers have also been hit by a strong yen.

Start Quote

We are likely to see profit margins rise, giving it more cash in hand and the ability to invest in developing new technologies”

End Quote Vivek Vaidya Frost & Sullivan

A strong currency not only makes Japanese goods more expensive to foreign buyers but also hits firms' profits when they repatriate their foreign earnings back home.

This especially hurts companies - such as Toyota - which rely heavily on overseas sales.

However, Japanese carmakers have received a boost in the past few weeks as the yen has fallen against the US dollar.

The Japanese currency has dropped nearly 15% against the US dollar since last November. It was trading close to 90.8 yen against US dollar in Asian trade on Monday.

Analysts said the fall was likely to have a positive impact on Toyota's growth.

"The decline in the yen is a welcome relief for Toyota," said Frost & Sullivan's Mr Vaidya.

"We are likely to see profit margins rise, giving it more cash in hand and the ability to invest in developing new technologies, which should help in its growth momentum going forward."

The Japanese carmaker raised its annual profit forecast in November.

It has predicted a net profit of 780bn yen ($8.6bn; £5.4bn) for the financial year to 31 March 2013, up from its earlier of forecast of 760bn yen.

Potential pitfalls

However, the carmaker does face some potential hurdles, not least from the continuing territorial dispute between Japan and China.

China is the world's biggest car market and is seen as key to future growth of firms such as Toyota.

However, the dispute centred around a group of islands in the East China Sea, which flared up late last year, has hurt relations between the two countries and seen Japan's exports to China decline.

The dispute is still unresolved and some fear that it may blow up again in the coming months and further hurt trade relations between the two countries.

The fear is that any such move may see anti-Japan sentiment rise and hurt sales of Japanese brands in China.

Analysts said that any such decline was likely to have a negative impact on Toyota's growth.

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