Riding a wave of increased auto sales, a weakening Japanese yen and a
fresh lineup of vehicles, Toyota Motor's profits more than tripled during its
most recent fiscal year.
The Japanese automaker said earnings for the fiscal year ended March 31 rose to
$9.7 billion (962.1 billion yen) from $2.8 billion (283.5 billion yen). It was
the largest annual profit in five years. Sales were $223 billion (22 trillion
yen), up 18.7%.
A declining value of the Japanese yen, which makes foreign transactions more
profitable, is helping Toyota's fortunes. In the last four months, the yen has
depreciated more than 20% in relation to the dollar.
The automaker said sales increased in every market around the globe. Nowhere was
this growth stronger than in North America, where Toyota sold 2.47 million
vehicles, a 32% hike from the previous year. Asia was another strong market,
with a 27% increase.
Toyota even managed a small sales gain in Europe, currently a troubled market
for many automakers.
In all, vehicle sales climbed to 8.87 million, up 17% from 7.35 million in the
prior fiscal year.
The better-than-expected results underscored how Toyota regained its footing
after massive product recalls of nearly 10 million vehicles in 2009 and 2010.
Toyota also suffered from product shortages in 2011, a result of the earthquake
and tsunami that struck Japan, and massive flooding in Thailand.
"Toyota has recovered much of the market share lost" due to these events, said
Alec Gutierrez, senior analyst at Kelley Blue Book. But he cautioned that
gaining more market share could be difficult. "Toyota now finds themselves in
one of the most competitive environments the industry has seen in decades," he
said.
The automaker could get a boost this year when it puts on sale an all-new
compact Corolla, one of the automaker's biggest sellers. "The new Corolla
launching later this year could inject new blood into the brand," Gutierrez
said.
Although sales aren't expected to continue to increase at last fiscal year's
rate, Gutierrez said profits are expected to remain healthy for Toyota, as the
company continues to reduce costs and the yen continues to weaken.
Toyota expects its rising fortunes to continue for the current fiscal year,
estimating a profit of $14 billion (1.37 trillion yen), up 42% from last fiscal
year. Revenue is projected to reach $240 billion (23.5 trillion yen).
Despite the rosy outlook, China still remains a looming question mark for
Toyota, said Jessica Caldwell, auto analyst with Edmunds.com.
Tensions between China and Japan over contested islands in the East China Sea,
and Toyota's positioning of its vehicles as more expensive offerings have hurt
the brand in China, Caldwell said.
This, when rivals Volkswagen and General Motors are having greater success in
China, could have long-term consequences for Toyota in the world's
fastest-growing auto market.
"You're setting yourself up for the next century really," Caldwell said of
automakers in the burgeoning Chinese market. "It's almost an endless opportunity
for carmakers. A lost opportunity there could be something that they never
regain."
By 2024, some analysts predict China could reach 30 million new car sales
annually, more than double the number sold in the U.S., Caldwell said. Although
she expects Toyota to aggressively realign its strategy in China, every moment
counts.
"It takes time," Caldwell said. "And as much time as you take you're still
losing out on sales and those are potential repeat customers."
@latimes.com
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