Toyota Motor forecast a 20 per cent profit decline in the current financial year on Wednesday (May 8), citing cost of investment in suppliers and strategy, after the world’s top-selling automaker delivered blockbuster fourth-quarter results.
Despite the leaner forecast, the results from the Japanese manufacturer smashed market expectations. Operating profit surged 78 per cent in the January-March fourth quarter. For the full year, it totalled 5.35 trillion yen (S$46.7 billion) – the first time for a Japanese company to top 5 trillion yen in operating profit, local media said.
While Toyota has been boosted by a weaker yen, it has been a big beneficiary of cooling demand for electric vehicles in some markets, such as the United States, where more customers are now embracing petrol-electric hybrids, Toyota’s traditional strength.
It was long criticised for pursuing its “multi-pathway” strategy championing hybrids and plug-in hybrids as well as EVs, a stance that is increasingly looking prescient given consumer concerns about EV driving ranges and the availability of charging stations.
Toyota expects operating income to total 4.3 trillion yen in the year to March 2025, a 20 per cent decline, as it invests in “human capital”, including providing support for labour costs of suppliers and dealers, as well as investments for its multi-pathway strategy.
“We’ll make investments in order to firmly protect the supply chain from a perspective of sustainable growth,” said Toyota CEO Koji Sato at a press conference after the release of the results.
GET BT IN YOUR INBOX DAILY
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Still, Toyota is not without its challenges, particularly in key markets such as China, where it has struggled to keep up with the pace at which a growing number of local manufacturers are rolling out software-loaded electric vehicles.
Toyota pioneered hybrids more than a quarter of a century ago with the Prius. They made up more than a third of the 10.3 million cars it sold in the financial year just ended, including the Lexus luxury brand.
Yet battery-only EVs made up just 1 per cent of its global sales in the year just ended, or about 116,500 vehicles, well below a previously announced target of 202,000 vehicles. Toyota expects to sell 171,000 battery EVs in the current financial year.
The fate of its business in China is likely closely tied to its EV strategy.
Toyota has said it would partner with Chinese tech giant Tencent and unveiled two battery EVs for the Chinese market at the recent Beijing auto show. REUTERS
