* Fears strong yen will harm Japan's auto industry
* Admits trailing Hyundai in some areas
By Chang-Ran Kim, Asia autos correspondent
NUERBURGRING, Germany, Oct 14 Toyota Motor Corp (7203.T) President Akio Toyoda said on Friday he would steer the automaker with a view towards measured, sustainable growth that would attract investors not swayed by short-term returns.
The world's biggest automaker is struggling to shake off losses from a historically strong yen and fierce competition from rivals, especially Hyundai Motor Co (005380.KS), which has borrowed from Toyota's business model to become a global powerhouse over the past few years.
That has resulted in a 20 percent drop in Toyota's shares so far this year, while Hyundai has surged 22 percent.
"I think Hyundai is making great cars, and in some areas I think we’re trailing them," Toyoda, an amateur racer, told Reuters in a rare interview at the Nuerburgring circuit in Germany.
"In the short term, you win some and lose some. But we’re working hard to build Toyota into a company that attracts investors who would look back 15 years and be glad they owned our shares."
Toyoda, 55, took his post two years ago after the company founded by his grandfather reported its first loss in more than half a century, as the global financial crisis exposed it to excess capacity resulting from a decade of rapid expansion.
The stretched growth also led to a recall crisis that shook Toyota’s reputation as a quality leader.
Against that backdrop, Toyoda in March outlined a new management strategy, dubbed Global Vision, which focused on a back-to-basics approach with few numerical targets.
"Some in the media criticised Global Vision, saying there were no real numbers, and they accused me of not caring about growth," said Toyoda, clad in a red racing suit for test runs before Saturday’s four-hour race at the famously deadly circuit.
"But I don’t want the company to be driven by numbers. I want it to be driven by making better cars and contributing to society. That will turn into profit, which we can use to develop better cars. That should be the cycle, and that will, as a result, build a company with a strong foundation."
A strong yen has dragged Toyota’s parent operations deep into the red because of heavy exposure to domestic production and exports. Toyota has forecast a parent operating loss of 370 billion yen ($4.8 billion) for the business year to March 2012.
Every one-yen fall in the dollar shaves 34 billion yen off Toyota's annual consolidated operating profit.
The maker of the Prius hybrid has forecast a group operating profit of 450 billion yen this year, assuming a dollar rate of 80 yen, or 13 yen lower than the average last year.
The dollar JPY= was around 77 yen on Friday, having traded below 80 for months.
Toyota is more vulnerable to a firm yen than domestic rivals because it builds about three million vehicles a year in Japan, roughly triple Nissan Motor Co's (7201.T) and Honda Motor Co's (7267.T) domestic output. More than half are bound for exports.
Toyoda acknowledged the current dollar rate was a major drag, and far from the 90 yen level he thought appropriate in light of economic fundamentals.
He repeated the Japanese auto industry’s warning that prolonged yen strength would lead to a "hollowing out" of the country's manufacturing sector and would cost thousands of jobs.
While Toyoda stood by the company's commitment to keep assembling at least 3 million vehicles at home, he did not know how long Toyota could wait before replacing more domestic components with imports.
"If (the strong yen continues), I don't know whether the Japanese auto industry would be able to continue as leaders of advanced technology," he said.
($1 = 76.825 Japanese Yen)
(Editing by David Hulmes)
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