Automakers Betting on Trump Infrastructure Boost: Toyota North America CEO

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Toyota Group Vice President Bill Fay speaks during the debut of the 2014 Toyota Tundra at the Chicago Autoshow, February 7, 2013. (REUTERS)

Automakers could be betting on a potential boost in demand from a new federal infrastructure program to boost sagging sales and clear inventories of cars and trucks, the head of Toyota Motor Corp's (TM) North American operations said on Thursday.

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Toyota North America Chief Executive Jim Lentz told reporters at a briefing that demand for new cars and light trucks in the United States is slowing, and he forecast sales of 17 million to 17.2 million vehicles this year, down from a record 17.55 million vehicles last year. Inventories of some vehicles are high, and Lentz said he does not believe current levels of discounting are sustainable.

"I will take 17 million all day," Lentz said, during an event to mark the $154 million expansion of Toyota's technical center near Ann Arbor, Michigan.

Lentz said the possibility that President Donald Trump could win congressional approval of his proposed $1 trillion infrastructure rebuilding plan could be encouraging automakers to maintain higher than normal inventories, in anticipation that the federal spending will translate into strong sales of trucks and other vehicles.

"If you get a $1 trillion stimulus, that could add 800,000 units," Lentz said. "That's one reason everyone is on the accelerator" trying to maintain demand.

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Automakers soon must decide "when is it prudent to lift off the accelerator," Lentz said. Toyota inventories are at about 68 days' supply, he said, lower than the levels at Detroit automakers General Motors Co (GM) and Ford Motor Co (F).

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On a separate issue, Lentz said Toyota expects to deliver 3,000 of its Mirai fuel cell vehicles in California this year, although deliveries to some customers may be slowed because of delays installing hydrogen refueling stations. Sale of the 3,000 fuel cell cars would be enough to cover California zero emission vehicle requirements, he said.

Lentz said he was pleased that the Trump administration's tax plan did not include a border tax on imported goods. "Until I see its tombstone ... it's never dead until it's dead," he said.

Toyota supports the Trump administration's decision to review tougher fuel economy standards enacted in the waning days of the Obama administration, Lentz said.

The company is pushing ahead to decrease greenhouse gas emissions from vehicles, and the Michigan research center will be central to company efforts to use more aluminum and other lightweight materials to improve the efficiency of future vehicles, executives said.

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