TOYOTA Motor kept its annual profit outlook intact despite reporting quarterly results that were dragged down in Japan and China, as the Japanese carmaker showed signs of recovery from domestic scandals and major recalls in the US.
Operating profit was 1.2 trillion yen (S$10.4 billion) for the June to September period, less than 1.4 trillion posted a year earlier and analysts’ average estimate for 1.3 trillion yen, the world’s No 1 auto manufacturer said on Wednesday (Oct 6). The company kept its full-year profit guidance of 4.3 trillion yen, helping to lift the share price.
Global car sales have taken a hit due to low demand for new cars, while output cuts were caused by regulatory probes and recalls at home and abroad. Toyota’s sales in Japan fell this year due to domestic recalls of the Prius. Meanwhile, production in China declined as it struggled to keep up in an aggressive price war with BYD and other local players.
Net sales for the quarter were 11.4 trillion yen, roughly the same from a year earlier. The carmaker trimmed its outlook for sales volume for the fiscal year to March, to 10.85 million units from 10.95 million, as output was negatively impacted by regulatory scandals involving falsified vehicle safety certifications.
Toyota will return to an annual production pace of 10 million units during the second half, according to chief financial officer Yoichi Miyazaki.
“Moving forward, we intend to reexamine our production process as we assess the impacts of verification issues on our manufacturing process,” Miyazaki said at a briefing.
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Legacy brands continue to lose ground in China, where a wave of software-heavy, battery electric vehicles (EVs) have rapidly taken over the world’s biggest market for passenger cars.
The playing field could change after the European Union and US raised their tariffs on EVs from China. While BYD has yet to establish a lasting foothold in Japan, stricter import controls could pressure it to strengthen its push into emerging markets that have long been the stronghold of Japanese brands.
While Chinese firms have been on the offensive in South-east Asia and Africa since before the tariffs went into effect, Bloomberg Intelligence senior auto analyst Tatsuo Yoshida sees them doubling down on those markets. “It’s likely they will strengthen that push,” he said.
Chief executive officer Koji Sato has pledged that Toyota will sell 1.5 million battery EVs annually by 2026, and 3.5 million by 2030. Since then, like most legacy carmakers, it has walked back those promises and gradually attributed more room to the upside potential of hybrid gas-electric cars. BLOOMBERG
