The the world’s number one carmakerToyota has kept its financial forecasts for the 2024/25 financial year unchanged, despite a sharper-than-expected fall in second-quarter net income, against a backdrop of plummeting sales in China and Japan. Between July and September, the group saw its net income plummet by 55% year-on-year to 573.8 billion yen (3.5 billion euros), with the decline standing at 26% for the first half as a whole, according to its results published on Wednesday. This was well below market expectations, which were counting on quarterly net profit of 994 billion yen, according to the consensus of analysts polled by Bloomberg. The company claims to have suffered from the strong appreciation of the yen, which is eroding its gains on exports. Operating profit fell by 20%, again more than expected.

The automaker’s second-quarter sales were virtually unchanged year-on-year, at 11,444 billion yen, but came in lower than expected (11,480 billion yen). The Japanese automotive giant, like its competitors around the world, is suffering from the slowdown in new car sales. Toyota saw its sales fall by almost 17% in Japan over the nine months from January to September, due in particular to several months of recalls of its Prius hybrid model. In June, Japanese authorities ordered Toyota – as well as its rivals Honda, Mazda, Suzuki and Yamaha – to stop supplying certain vehicles to the national market due to irregularities in certification testing.

Read also
From Toyota to Panasonic, why Japan’s major corporations are pulling out of Olympic sponsorship

Focus on safety and quality

This had plunged production, although the manufacturers concerned assured us that vehicle quality was not in question, and that their own tests were even stricter than official standards. Toyota took the time to reconsider its approach to “give priority to safety and quality”.Nevertheless, the company’s CFO Yoichi Miyazaki conceded on Wednesday. Over the same January-September period, Toyota’s sales in China – a crucial market for the company – plunged by 18% in the face of stiff competition from Chinese manufacturers, including BYD, champion of electric cars.

As a result, the Group has revised downwards its sales volume forecasts for the 2024/2025 fiscal year, now counting on 10.85 million vehicles sold – compared with 10.95 million anticipated to date, and 11.09 million in 2023/2024. On the other hand, despite the darkening horizon, the company has not altered its financial forecasts: for the full year ending March 2025, it still expects net income to fall by 28% year-on-year to 3,570 billion yen, operating profit to fall by 19.7% and sales to rise by 2%. The Group is counting on a revival of its global production in the coming months, with the recent restart of a plant in the United States after a long partial shutdown.