Toyota CEO Akio Toyoda -- shown here at the launch of the Lexus GS -- aims for record sales.
Toyota Motor Co. underscored its recovery from last year’s Japanese earthquake and tsunami by not only delivering a huge jump in quarterly earnings but by also sharply increasing its upcoming sales forecast.
The maker saw net income for the April-June quarter surge to 290.3 billion yen, or $3.7 billion, from a mere 1.1 billion yen a year ago. Sales, meanwhile, jumped 60%, to 5.5 trillion yen, or $70.5 billion, as Toyota dealers were once again able to stock showrooms with vehicles that were in short supply after the March 2011 natural disaster. The maker’s problems last year were further complicated by flooding in Thailand last autumn.
“In all regions, vehicle sales increased significantly due to strong recovery of demand which had suffered last year from the lack of supply caused by the Great East Japan Earthquake,” said TMC Senior Managing Officer Takahiko Ijichi.
Toyota once again delivered strong sales in the U.S. market during July, demand for products such as the new 2012 Camry sedan, rising 26.1%. The maker capped today’s earnings news by revealing plans too boost its global sales target for 2012 to 9.76 million.
That would all but certainly allow the Japanese giant to regain its position as the world’s best-selling automaker, a crown it held for three years before having it snatched away by arch-rival General Motors last year – with Germany’s Volkswagen AG sliding into second place. For the first six months of the year, Toyota sold 4.97 million vehicles worldwide, giving it a commanding 300,000-unit lead over GM. VW, meanwhile, sold 4.5 million vehicles for the first half.
In the midst of last year’s disasters, the question was whether Toyota would be able to hang onto traditional loyalists or would they migrate to other brands?
“Toyota’s recovery has been a remarkable one this year,” said Jesse Toprak, chief analyst for TrueCar.com. “Customer loyalty for Toyota products turned out to be much stronger than we anticipated.”
The sales target set by President Akio Toyoda – grandson of the automaker’s founder – would be an all-time record, exceeding the 9.36 million vehicles Toyota sold in 2007. Toyoda has routinely denied the maker has made being number one its target but he has indicated a goal of exceeding 10 million sales worldwide, a target that now seems well within reach, perhaps as early as 2013, depending upon how the global economy shapes up.
That could be one of the biggest challenges to the maker. Like most manufacturers, it has been facing sharp declines in Europe as the Continent’s economy continues to flounder. And while sales in the U.S. have been recovering, July’s sales gain was actually a bit below expectations. There are growing concerns that with the American economy weakening car sales for the latter months of 2012 could begin to slide.
The Chinese market also is under-performing so far this year and most analysts expect it to struggle to deliver an overall 10% growth rate. Toyota lags rivals GM and VW in what is nonetheless the world’s largest automotive market.
Then there’s Japan which continues a decade-long slump in car sales. But the bigger issue there is the rise of the yen which has made it increasingly difficult to export cars to the U.S. and other markets. While Toyota has promised to maintain a production base in the country it has been shifting more and more manufacturing overseas – its assembly operations in the U.S. now rivaling those of the Detroit makers.
“Despite the Yen’s appreciation, operating income increased substantially thanks to increased vehicle sales and cost reduction efforts including our company-wide VA activities,” said Managing Officer Ijichi.
Cost-cutting for the quarter saved Toyota about 70 billion yen, or $897 million for the quarter, the company revealed.
Even so, the maker decided not to increase its earnings forecast for the full fiscal year because of a variety of issues including a European currency slide.
For the full fiscal year, which concludes on March 31, 2013, Toyota anticipates profits will total 760 billion yen, or $9.7 billion, which would be a 168% increase. It is forecasting 22 trillion yen, or $282 billion, in sales, an 18% jump.