Toyota Motor raised its full-year operating profit forecast – albeit falling short of analysts’ estimates – as the carmaker finds a balance between the benefits of a weaker yen on exports of its Prius and Lexus models and the impact of rising trade tensions under US president Donald Trump.
Operating profit will probably be 1.85 trillion yen (€15.2 billion) in the fiscal year through March, up from its previous forecast of 1.7 trillion yen but about 10 per cent lower than what analysts estimated.
The Toyota City, Japan-based automaker reported third-quarter operating profit declined 39 per cent, also missing consensus estimates.
Even with the benefits of a weaker yen boosting repatriated profits, Toyota must contend with possible trade tensions after Mr Trump criticised the automaker’s plans to build a Corolla plant in Mexico.
Struggle to sell
The attack broadened with the US leader rebuking Japan for sending the US hundreds of thousands of cars from what he said were “the biggest ships I’ve ever seen” while American carmakers struggle to sell their vehicles in Japan. “It’s difficult to give any impact forecast from Trump’s administration at this point,” Tetsuya Otake, a Toyota managing officer, said in a briefing in Tokyo on Monday.
“Toyota will co-operate with its group as it watches the moves from Trump’s administration.”
Toyota exports more vehicles to the United States than its two largest Japanese peers, Nissan Motor and Honda Motor. The carmaker makes most of the Lexus luxury cars in Japan even as US is the brand’s largest market. It also ships the Tacoma pickup trucks from Mexico to the US.
In comparison, most major carmakers produce the majority of the vehicles sold in China locally, due partly to the tariffs China levies on car imports.
Japanese carmakers face a “significantly greater risk” from frictions over the trade imbalance with the US than from revisions to the North American Free Trade Agreement with Mexico and Canada, Takaki Nakanishi, an analyst at Jefferies Group, wrote in a report last month.
US manufacturers
Prime minister Shinzo Abe met with Toyota president Akio Toyoda on Friday, where they discussed current affairs, according to the automaker chief.
Mr Abe, who is scheduled for a summit with Mr Trump in Washington on February 10th, told the US leader in a phone call that 75 per cent of parts in the Toyota Camry model sold in the US are made locally, which is a higher proportion than the “Big Three” US manufacturers.
Toyota last year lost its global number one sales title to Volkswagen AG due mainly to its performance in the US and China.
Toyota sold 2.4 million vehicles in the US last year, down 2 per cent from 2015. While sales of SUVs surged on lower gas prices, demand for the Prius hybrid car fell 26 percent.
Demand for the current Camry sedan has also fallen ahead of the introduction of a redesigned model later this year. Sales in China expanded at a slower pace than the overall market and fell behind Honda for the first time.
– (Bloomberg)