Daihatsu President Masahiro Inoue said he sees South America and Africa as growth markets for compact cars made by the Toyota subsidiary.
Inoue, who took over Toyota’s operations in Latin America in March, pointed to strong demand for compact cars in those emerging markets due to the presence of narrow roads. In the short term, however, Inoue said he is focused on preventing a repeat of certification scandals at the company last year.
Inoue is trying to restore Daihatsu’s reputation after the company was forced to halt all vehicle deliveries when an internal investigation revealed decades of irregularities in its safety certification results. At the same time, he is looking for new sources of growth to build on the automaker’s reputation as a manufacturer of small, affordable cars.
“Latin America and Africa are where the room (for growth) is, as Southeast Asia is becoming quite saturated,” Inoue said in a group interview on Monday. “Daihatsu’s high-quality, low-cost production is so well-suited to emerging markets that we can throw a fastball right in the middle of the strike zone.
Many countries want to produce cars locally, which helps create employment, he added.
For its domestic operations, which account for about half of Daihatsu’s production and sales, Inoue said sales of small and affordable boulder Mini vehicles are likely to continue producing around 1.85 million units annually over the next three to five years.
Still, the kei car market may shrink in the long term as Japan faces the challenges of a declining birth rate and an aging population. It is difficult to make money on smaller vehicles, and Daihatsu can avoid losses thanks to sales of service parts and car accessories, he added.
“It might be better to compensate for this by entering overseas markets,” Inoue said.
