August 2014 Sales Conference Notes

August 2014 Sales Conference Call
Wednesday, September 3, 2014

August 2014 Sales Conference Call (audio)

Good afternoon and thank you for joining us to review August sales results for Toyota, Scion and Lexus.

I’m in Ann Arbor Michigan, preparing for the start of the Toyota Advanced Safety Seminar that kicks off this evening. Hope to see some of you here.

Speaking today will be:

Bill Fay, Group Vice President and General Manager of the Toyota Division
And Jeff Bracken, Lexus Group Vice President and General Manager

A recording of the call will be available at Pressroom.Toyota.com about one hour after its conclusion and of course our business communications team also is available to field any additional questions you may have at (310) 468-5297.

Now I’d like to turn it over to Bill for a look at the August results.

Toyota Division Group Vice President and General Manager Bill Fay:
Thank you Julie.

Hello everyone, and thank you for joining us today. Hope you all had a good Labor Day Weekend.

August is traditionally

One of the auto industry’s best months of the year
And last month was the best August in many, many years

In fact

Combined Toyota, Lexus and Scion sales set a new record for the month
As both the Toyota Division and Lexus set August records
Labor Day Weekend turned out to be the best sales weekend so far this year
- With several of our sales areas having their best weekend – ever

Total industry sales should top 1,588,000 vehicles

Up 5.7% from last August on a volume basis
- Which was the best sales month in all of 2013 despite having one few selling day
Third time this year the industry has topped 1.5 million
Best August in 11 years (2003, 1.62)

Puts the Seasonally Adjusted Annual Rate

At 17.6 million
- First time since July of 2006 the SAAR has hit the 17 million mark
- Pushed YTD SAAR to 16.4 million

The record August For Toyota, Lexus and Scion dealers

Saw sales of 246,100 (Aug. 2006)
Up 6.3%
That made Toyota the #1 retail manufacturer
- By nearly 30,000 units
And the #2 manufacturer overall
Both for the second straight month

For the Toyota Division

Our record August came in at 213,291 (Aug. 2006)
The second time this year the Division has topped the 200,000 vehicle mark
Also ran our string as the industry’s top retail brand to eight months

Kelley Blue Book estimates that compact SUVS and crossovers

Accounted for much of the industry growth in August
Certainly true in our case
As the RAV4 had a record-shattering, best-ever month
Pushing total Toyota Division SUV sales up 28%
For our best SUV month ever

RAV4 Sales of 35,614

Were up almost 52 percent
Topping the previous best-ever record set just last month
By nearly 9,000 units
And outselling Corolla, which has never happened before

Our other SUVs also performed well

With 4Runner sales of more than 7,600
Up 67%

And while the new Highlander shows a decline

Strictly a matter of supply as demand was strong
And with sales of nearly 11,500 vehiclesit remains the fastest turning vehicle in dealerships

Both Camry and Corolla posted excellent months

With Camry sales topping 44,000
The 4th time this year it has exceeded 40,000

One of those cars

Was the 10 millionth Camry built at our Georgetown plant
Which went to the lucky winner
Of a lottery among the 7,000 employees

And Corolla

Sales rose 23% for the month
To more than 33,000
4th consecutive month with sales above that mark
The first that has happened in eight years

As a result

Camry remains the best-selling car in America YTD
While Corolla is the best-selling subcompact

Avalon also contributed to the August increase

With sales up 13% at 7,000

Toyota Division hybrid sales

Hit the 30,000 vehicle mark
Or more than half of all the hybrids sold in the U.S.
Prius family sales alone accounted for nearly 23,500 vehicles
Topping 20,000 for the second straight month
- With nearly 40% of those being sold in California

Finally for August

Toyota Certified Used Vehicles also had a good month
With sales of nearly 32,500 vehicles

Looking Ahead

We held our annual Toyota Division dealer meeting last week and dealers are very encouraged by the vibrancy and consistency of the automotive market
With consumer confidence at a 7-year high
We look for continued strength in the months ahead

At Toyota we’ve had a great sell-down of 2014 models

In fact, we currently have the lowest inventory levels since the aftermath of the earthquake and tsunami in Japan limited production more than three years ago

The good news is

Overall availability remains good
And we’ll close out the year with our strongest fourth quarter production plan in seven years (2007)

Production of the new 2015 Camry

Begins later this month in Georgetown
We expect a seamless ramp-up for the new car
- Should be arriving at dealers by the end of the month

Increased Highlander production

Also is underway at our Princeton, Ind. plant
Where we just announced an investment of another $300 million
That will add 300 jobs and increase annual Highlander production up to 30,000 units by the summer of 2016
With Highlander sales up 15% this year and still in short supply
Nearly a year after the new model was introduced
Additional production will help meet customer demand

Thank you for joining us today and now I’d like to turn it over Jeff Bracken for a look at Lexus.

Lexus Group Vice President and General Manager Jeff Bracken:

Thank you Bill. And hello everyone.

I want to echo Bill’s comments…

August was an exceptional month for the industry –
And a second straight record-setting month for Lexus
With sales of 32,809
Up 10%
That’s the 11th straight month of Y/Y gains
As both our passenger car
And luxury utility lineups
Posted solid increases

The IS, CT, ES and GS all recorded increased gains in August

With IS sales of 5,300
Up 20% for the month
- You might recall last August was the launch month for the new IS
YTD IS sales are running 77% ahead of last year

The launch of the new CT hybrid

Continues to go very well
With sales of nearly 2,200
Up 23% for the month
Making it the best-selling luxury hybrid passenger car
And now up 17 ½ percent YTD
GS sales were up 13 ½ percent
While ES was the volume leader
- At 7,700 units

Taking a look at our luxury utility vehicles

As Bill noted, it was a big month for utility vehicles and crossovers
And we sold nearly 12,000 RX models in August
As it continues to be the best-selling luxury utility vehicle

The GX recorded another good month

At 2,200, more than doubling year-ago levels

And Lexus Certified Pre-Owned Also had a record August

With sales of nearly 7,000 vehicles

We’re in a good inventory position for the rest of the year

And looking forward to having two all-new models go on sale

Before the end of the year
NX entry-level luxury crossovers
- Off to a great start in Japan
- With already more than 5,000 hand-raisers here in the U.S.
Also just started our launch activities
- For RC and RC F sport coupes
- Being very well received
So we’re looking forward to a strong close in 2014

Thank you for joining us today. Now I’d like to open this up for any questions you may have.