Toyota Launches New Model at Home, Plans Expansion into Korean Market

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Toyota Motor Corp. (ADR NYSE: TM), the world's largest automaker, today (Tuesday) launched efforts to maintain its leadership position by introducing a new hybrid model in Japan and expanding into the Korean market where it will face stiff competition from Hyundai Motor Co. Ltd. (PINK: HYMLF).

The announcements came on the heels of a surprise statement from Honda Motor Co. Ltd.'s (NYSE ADR: HMC) Chief Executive Takanobu Ito, that Japan's second biggest car maker is considering launching electric vehicles in the United States, Europe and Japan.

Toyota, with its flagship Prius, is the unquestioned leader in the fast-growing hybrid market, projecting it will sell 500,000 to 600,000 hybrid vehicles globally this year.  It has a stated goal of selling 1 million hybrid vehicles annually after 2010.

Activity in the hybrid vehicle market has been heating up among the world's carmakers, as most have plans to utilize the clean-fuel technology in their next-generation cars.

While General Motors Co.'s much-anticipated Chevrolet Volt is expected to hit showroom floors in 2010, Toyota and Nissan Motor Co. Ltd. (OTC: NSANY) plan to offer plug-in electric vehicles (PHEV) globally by 2012.

Honda's decision represents a shift in strategy away from its previous position that PHEVs were a short-range option employing expensive batteries that would eventually be replaced by hydrogen fuel-cell cars.

However, Honda has been unable to overcome logistics problems in setting up networks of hydrogen fueling stations, forcing it to focus on PHEVs as a short term solution to expand market share. Ito had also previously acknowledged Honda may need pure electric cars to meet tough emissions regulations in California.

"There is no change to my view that hydrogen fuel-cell cars will in the end be proven the best, (but) electric vehicles will also be a core option for cars in the future," Ito told Reuters.

Meanwhile, Toyota's President Akio Toyoda reiterated his stance that the company will maintain its domestic market share despite the expiration of government subsidies and tax breaks in March.

Speaking Monday at a press conference, Toyoda said, "to be honest, we hope [the subsidies] will continue." But he added, "we aim to maintain [the current momentum] even without" the government's support, The Wall Street Journal reported.

To further support sales at home, Toyota introduced a new hybrid sedan, the Sai, which it hopes will sell 36,000 units a year in Japan. The Sai, Toyota's second hybrid-only model, is less expensive than the popular Prius, and is a repackaged version of the Lexus HS250h hybrid, Reuters reported.

Also Tuesday, Toyota began selling Camry sedans, Camry hybrids, Prius hybrids and RAV4 sport-utility vehicles in South Korea.  The company has been selling its Lexus brand in the country since 2001.

The move is a direct challenge to the 72% market share held by Hyundai and affiliate Kia Motors Corp. ORD (PINK: KIMTF). Hyundai has long had a lock on its home market as carmakers were slow to enter the country after the Korean government first allowed limited competition in 1987.

But Korea has eased trade restrictions and foreign automakers are invading, looking for new markets after sales in the United States, Europe, and Japan suffered a precipitous drop during the recent economic downturn.

The Korean company's dominant position in its home market "is absolutely abnormal," Chae Hee Gun, an analyst at Taurus Investment Securities Co. told Bloomberg. Hyundai "will keep a close eye on its bigger rival for the long term," he added.

Hyundai is challenging the Camry globally with its newly-introduced sixth-generation Sonata. The Korean company hopes to position itself as more than a low-cost alternative to Japanese carmakers, according to Bloomberg.

In the United States, currency distortions have helped the company take market share from Toyota and General Motors, increasing sales by 1.3% as the overall market dropped 27%.

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