Toyota turns to BMW to power European rebound against VW

Toyota Motor Corp., which was overtaken by Volkswagen AG in sales last year, is striking back on the German automaker's home turf.

Toyota is rolling out Europe's first hybrid subcompact and the image-boosting GT86 sports coupe this year in a bid to claw back market share in the region after sales plunged 41 percent since 2007. The Toyota City, Japan-based company will further bolster its European business by outfitting its vehicles with diesel engines from Bayerische Motoren Werke AG from 2014.

"It's unacceptable for Toyota to be at this volume level in Europe," Didier Leroy, Toyota's European chief, said in an interview. By cutting management layers to streamline decision- making over the past two years, "we made ourselves much leaner, much more agile. We strongly went for the fighting spirit in everything we do."

That shakeup is likely to pay off this year, with Toyota predicting its first profit in Europe in five years. Market share in the European Union is set to rise to 6.6 percent from 5.7 percent last year, while the VW brand slips to 18.2 percent from 18.5 percent, according to data from IHS Automotive. By making gains in Europe, Toyota aims to halt VW's march to become the world's biggest automaker, overtaking General Motors Co.

Toyota lost the top spot last year when disruptions caused by the earthquake in Japan and the lingering effects of global recalls in 2009 and 2010 caused the maker of the Camry sedan to drop to third as VW leapfrogged Toyota to become number two.

Hybrid Yaris

"The real issue for Toyota is winning back customers," said Jonathon Poskitt, head of European sales forecasting at LMC Automotive in Oxford, England. "Toyota really needs to refocus on the requirements of what are sophisticated European customers that already have a great choice in new vehicles."

The hybrid version of the Yaris, which competes with VW's Polo, is part of the campaign. Production on the gas-electric subcompact started at Toyota's factory in Valenciennes in northern France earlier this week after an investment of 25 million euros ($33 million). The hybrid variant of Toyota's European best-seller gets the equivalent of 76 miles per gallon. More at Detroit News

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