The Toyota Motor Corporation reported strong gains in profits for 2002 and one of the largest net income figures in the automotive industry's history today, mainly because of strong demand in the United States. But the company said its three-year run of strong profit growth is in jeopardy in the current year because of sluggish economic growth around the world.

Toyota joined Honda Motor, Nissan and Mitsubishi Motors in reaching new financial peaks in the latest fiscal year, which ended March 31. Toyota has been able to outsell its American rivals without relying nearly as heavily as they do on cash incentives to draw buyers. And the higher fuel prices and uncertain economy in the United States have tended to favor Toyota and the other Japanese makers, because their cars are more fuel-efficient and are seen as more reasonably priced.
Ultimately, though, Toyota and other Japanese carmakers make the bulk of their money in the United States. Toyota's lineup remains popular there, but the average age of its buyers is rising. To keep its brands fresh and sales growing, Toyota, Honda and Nissan each must come up with models that can attract younger Americans, as Volkswagen and Hyundai have done.

"The Gordian knot for Toyota is that its cars are so popular with baby boomers that it turns off the Gen X crowd," said Chris Richter, an auto analyst at HSBC Securities in Tokyo. "If you can't change with the new generation, your customers will eventually get old and die."