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Toyota's group unit sales stood at 10.8 million vehicles in 2024. Picture: REUTERS
Toyota's group unit sales stood at 10.8 million vehicles in 2024. Picture: REUTERS

Japan’s Toyota Motor is expected to post its second consecutive quarterly profit drop when it reports third-quarter earnings on Wednesday, as sales growth cools after a strong run powered by hybrid vehicles.

The world’s best-selling carmaker is likely to still deliver more than $9bn in quarterly operating profit, as it is expected to have benefited from a shift to relatively high-margin hybrids from conventional petrol cars in the US.

Still, lower sales and output volumes have indicated a slight deceleration for Toyota. Analysts said that means the quarterly result could come in somewhat soft, despite favourable exchange rates.

That was the “common narrative” last week in results from a number of Japanese auto suppliers, said James Hong, head of mobility research at Macquarie.

Toyota is expected to report a 16% year-on-year decrease in operating profit to ¥1.419-trillion ($9.1bn) for the October-December quarter, according to the average estimate of nine analysts polled by LSEG.

The expected decline follows a 20% profit drop in the previous quarter, marking a shift away from the record earnings streak Toyota enjoyed in the months before that, supported by strong hybrid sales and the yen’s slide against the dollar.

Toyota already said last week its global group unit sales stood at 10.8-million vehicles in 2024, meaning it remained the world’s top-selling carmaker for a fifth consecutive year.

It has also disclosed global sales of its namesake and Lexus brands were largely unchanged from a year earlier in October-December, seeing a fall of less than 1%, while output dropped 4%.

Toyota had seen its production normalise in recent months, and management was likely to come up with constructive guidance for the final quarter of its financial year, Hong said. “But the third quarter might be a bit soft.”

Toyota is dealing with intense competition from Chinese brands, including BYD, in Europe, South America, Southeast Asia and China itself, the world’s biggest auto market and one where electric-vehicle demand remains robust.

The carmaker overcame a four-month production stoppage of the Grand Highlander and Lexus TX SUV models in late October.

Analysts and investors will be particularly focused on Toyota’s outlook for the remainder of the fiscal year, which runs until end-March.

They will be looking to hear about its strategy for managing its North America operations after US President Donald Trump imposed hefty tariffs on Mexican and most Canadian imports, only to pause them days later. Toyota has auto plants in Canada and Mexico.

Focus will also be on Toyota’s future electrification plans and the way it seeks to build on its hybrid car sales, which made up 43% of its unit sales in the previous quarter.

After reaching a peak last March, Toyota’s share price has suffered, declining 25% from that high. Its shares are down 8% so far this year.

Reuters

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