Toyota Motor Corp yesterday said it was on track for a record annual profit as its nine-month net earnings more than doubled to US$15 billion on a sharp drop in the yen and surging overseas sales.
The buoyant results underscore a recovery not only for the world’s biggest automaker, but also for rival Japanese auto giants, including Nissan Motor Co and Honda Motor Co. The trio have been big winners over the past year as a sharp drop in the yen inflated exporters’ repatriated profits, further boosted by improved overseas demand in key markets, including the US and China.
China sales fell off a cliff in late 2012 and into last year as a Tokyo-Beijing diplomatic row sparked a consumer boycott of Japanese brands in China, the world’s biggest vehicle market. Relations remain tense, but Japanese manufacturers have said their dented sales are coming back to pre-spat levels.
Toyota said it earned ￥1.52 trillion (US$15 billion) from April to December on sales of ￥19.12 trillion — propelled by a five-fold jump in third-quarter earnings. It also boosted a fiscal year to March profit forecast to a record ￥1.9 trillion.
The automaker has ramped up its bid to tap emerging markets while key US demand has also been on the upswing, helping the firm book ever-increasing profits.
“In addition to the positive impact of the weaker yen, our operating income increased due to marketing efforts such as increased vehicle sales and cost reduction activities,” Toyota managing officer Takuo Sasaki said.
Last month, Toyota kept the title of world’s biggest automaker with calendar-year 2013 sales of 9.98 million vehicles, outpacing Germany’s Volkswagen and General Motors Co (GM), and said it expects this year to become the first automaker to break the 10 million vehicle sales barrier.
Toyota broke GM’s decades-long reign as world’s top automaker in 2008, but lost the crown three years later as Japan’s quake-tsunami disaster hammered production and disrupted the supply chains of Japanese automakers.
Despite the buoyant figures so far, an April sales tax hike in Japan and possible slowdown in key US and Asian markets could put the brakes on sales, said Takaki Nakanishi, analyst and CEO at Nakanishi Research Institute in Tokyo.
“The Japanese auto industry has been on the upswing thanks to the weak yen and strong demand in the US and Asia, including in Japan,” he said.
“But there are some negatives on the horizon. The sales tax hike in Japan will affect auto sales for sure, although I think the impact is likely to be limited. Also, the recent strong demand in Asia and American is likely to lose its momentum,” he said.
He added that gains from the weak yen would taper off, while political unrest in Thailand, a major production base for Japanese automakers, could also dig into results.