Toyota Motor warned that “unprecedented” hikes in raw material costs could reduce a fifth of full-year profits, a clear sign that the world’s top automaker by sales is no longer bridging supply-chain shortfalls. which shook the global industry.
see photosToyota predicts recovery from pandemic across the world will help Chinese and US auto markets recover
Toyota Motor warned that “unprecedented” hikes in raw material costs could reduce a fifth of full-year profits, a clear sign that the world’s top automaker by sales is no longer bridging supply-chain shortfalls. which shook the global industry. Reporting a 33% drop in fourth-quarter operating profit, the Japanese giant saw its shares fall more than 5% on Wednesday, before falling more than 4% – their biggest one-day drop in two months. . The Tokyo benchmark was up 0.3%.
Toyota did well during the first months of a global semiconductor shortage thanks to its large stockpile of chips, but it now rivals production slashes due to a prolonged crisis as well as China’s fresh COVID-19 restrictions. has joined.
The home of the famed Corolla compact car said it expects material costs to more than double to 1.45 trillion yen ($11.1 billion) in the fiscal year starting in April, which it expected to tackle by switching to lower-cost materials .
“We need to think about how we can respond to physical inflation by bridging the gap between original equipment manufacturers and suppliers and working together,” Chief Financial Officer Kenta Kohn told reporters, referring to car manufacturers. Huh.”
“As the price of materials continues to rise, we need to work to reduce the amount of materials used as much as possible and replace them with less expensive materials.”
The automaker expects to sell 8.85 million vehicles globally this fiscal, up 7.5% from last year.
Toyota, which in December pledged 8 trillion yen to electrify its cars by 2030, said raw material costs for battery electric vehicles (BEVs) are even higher.
However, customers are sensitive to price hikes, said chief technology officer Masahiko Maeda, making it difficult for Toyota to pass on rising costs, a feat that EV leader Tesla Inc. has successfully managed to accomplish.
Hybrid car champion Toyota has lagged behind its peers in EV investment. It previously projected 3.5 million in annual EV sales by 2030, or about a third of its current vehicle sales, behind closest rival Volkswagen.
For the current fiscal year, Toyota estimates operating profit will fall nearly 20% to 2.4 trillion yen. According to Refinitiv, analysts had expected earnings to rise 12% to 3.36 trillion yen.
In the January-March quarter, its profit declined to 463.8 billion yen, well below the average estimate of 521.1 billion yen.
The yen’s sharp depreciation to a two-decade low has worked in favor of Japan’s export-driven auto industry. But rising raw material costs and disruption in global supply chains due to China’s COVID restrictions are weighing down profits.
In China, auto sales nearly halved in April, while Tesla sales nearly fell as factories closed and lockdowns hit demand.
Toyota on Tuesday slashed its global production target for May from about 50,000 vehicles to nearly 700,000 as it plans to suspend some operations for up to six days due to China’s lockdown.
The plan makes several cuts to its production plan between April and June after frequent production changes frustrated suppliers.
Nevertheless, Toyota predicted that the recovery from the pandemic across the globe would help the Chinese as well as the US vehicle market to strengthen for the current fiscal.
Toyota’s domestic rivals Nissan Motor Co and Honda Motor Co reported earnings on Thursday and Friday, respectively. Shares of Nissan closed down 1.5% on Wednesday, while Honda closed down 3.1%.
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