Toyota, the world’s largest automaker, has reported an impressive performance in the first quarter, nearly doubling its operating profit. This growth was attributed to increased sales and productivity, as well as the favorable impact of a weaker yen. The company’s operating profit for the three months through June reached 1.12 trillion yen ($7.85 billion), a remarkable 94% increase from the previous year. This exceeded the expectations of analysts who had estimated a profit of 945.22 billion yen.
Toyota credits its sales volume boost across all regions to joint efforts made with suppliers to improve productivity. The automaker highlighted that sales volumes in various regions have increased compared to the same period a year earlier. However, Toyota did caution about its performance in the crucial North American market, where the company has been facing challenges. These difficulties have impacted the automaker’s ability to invest significantly in electric vehicle (EV) production.
Despite the robust first-quarter results, Toyota has maintained its profit forecast of 3.0 trillion yen for the current year, stating that the conditions have not drastically changed since the previous quarter. This forecast falls slightly below the average forecast of 3.6 trillion yen made by 23 analysts. Toyota may consider revising its forecast around the time of its half-year results.
In recent times, Toyota has unveiled ambitious plans to compete more effectively in the global market for battery-powered vehicles and outlined its hydrogen strategy. The company is keen on not missing out on the rapid shift to EVs, particularly in China, where local competitors and price cuts by Tesla and others have put pressure on its market share. Toyota acknowledges that competition in China has become “extremely severe” and cited foreign exchange rate fluctuations and its response to price cuts as factors that have affected its performance in this crucial market.
To address these challenges, Toyota is strengthening the development of EV technology in China and aiming for significant cost reductions in manufacturing to enhance competitiveness. The company has also benefited from pent-up demand in North America, which has seen an increase in sales as the impact of a post-pandemic chip shortage diminishes.
Globally, Toyota sold approximately 2.53 million Toyota and Lexus luxury brand cars in the quarter, with around 34% of those being hybrids and other electrified vehicles. Performance in Japan was particularly strong, with operating profit more than doubling from a year earlier.
Following the release of the earnings report, Toyota’s shares experienced a positive response, with an increase of 2.5% to 2,445.5 yen, signaling investors’ confidence in the company’s performance.