The New York Times reports that Toyota reports (and we report their reporters reporting the report) that Toyota's profits sank by 28 percent. "For the year to March 31, 2009, the Japanese automaker forecasts net profit to fall 27.2 percent to 1.25 trillion and operating profit to decline yen 29.5 percent to 1.60 trillion yen, breaking a seven-year string of record results." That's a whole lot of yen. And make no mistake: ToMoCo is hurting. Stateside sales of the new Texas Tundra are up 24.8 percent year-to-date– but that's an increase of fewer than 7k units. And despite several hot-selling products, overall U.S. sales are down 3.3 percent (789,447). This after Toyota put the pedal to the metal on production, building big-ass factories worldwide. Equally painful in that "be careful what you wish for" kinda way, worldwide market growth has sent commodity prices through the [optional sun] roof. Not to mention the fact that all that Detroit-sourced kvetching about Japanese currency manipulation has proven to be so untrue it literally hurts (the dollar's down 10 percent on the yen). Still, these guys are strong enough to weather the storm. The Times concludes by pointing out that Toyota is still valued at about $180b, and compares that to Daimler and VW combined. We'd like to point out that Yahoo!Finance puts GM's "enterprise value" at $32.94b.
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I don’t think this will be too much of a problem next year.
Toyota recently raised their prices in line with raw material prices. That’s where most of the “hurt” came from.
Also, when you think about it, 1.25 trillion yen equates to just over £6 billion.
So, I don’t think it’s time for a Toyota deathwatch anytime soon….
True enough, Katie. At least Toyota are in a position to be ABLE to raise prices along with commodity costs (or maybe a portion thereof). Think GM could? How about Chrysler? Maybe Ford could on some cars, but then again maybe not in the United States…
Interestingly enough, when I read a couple of years ago that TATA was valued higher than GM, I knew right then and there that GM’s days were numbered. As for Chrysler, well… look at the recent 75% drop in value assigned to the 19.9% of Chrysler still owned by Daimler.
If only GM had that problem…. Only a $11.873 (US) billion net profit after a 28% reduction forcasted. And yet, Toyota is probably messing their pants the brown way over this, whereas GM wouldn’t be too quick to roll heads… or do anything.
Any automobile company (and motorcycle companies!) poised to immediately take advantage of rising energy prices has a good leg to stand on in this downturn. Off the top of my head, I’d put Toyota in the top 3, at least from a customer’s perspective.
Bummer.
Let’s bury this and get back to hating on all domestic manufacturers.
Only up 25% from last year’s Tundra? That’s gotta hurt, the old Tundra was far from the right formula to compete with Ford/GM and this new one only seems to affect Nissan/Dodge.
rpenna,
When the big 2.801 can raise prices on their goods without customers backing away, sell vehicles at a good profit, have a good image of quality and reliability, have a management which thinks long term (not short), have a market capitalisation of £90 billion AND turn a £6 billion profit, but STILL call it a failure, then maybe people will stop “hating” on the domestics.
Until they show an effort to turnaround, maybe then will people take them seriously.
P.S It’s no coincidence that people are starting to respect Ford as they are showing signs of pulling themselves back into a decent shape…
In the “Should the Fed (Government, not Reserve I assumed) Bail Out GM” thread, a few comments were along the lines of: let ’em die, other manufacturers will pick up useful, trained workers.
How likely is that scenario with profits dropping 28%?
Toyota’s profit the last three fiscal years has been approximately 10 billion US dollars each year. So maybe they only make 5 billion US dollars in profit this fiscal year. Boo hoo hoo.
Rpenna Toyota actually has goodwill from their customers. That’s the byproduct you get when you give people what they feel is a good product and experience repeatedly. Gm has the opposite because so many people feel that they have been burned by them. Believe it or not a lot of people who do not work fro the auto industry actually like Toyota and dislike GM.
Katie- glad to see you are optimistic (as always) regarding the futre of Toyota. Tundra may be up 25%, but that only equates to approximate sales of GMC Sierra line alone. Ford and Chevy sales dwarf the Tundra.
I would like to better know world-wide where the losses were heaviest.
Is this primarily the result of trying to copy the US manufactuers and cater to the large vehicle demands of the American consumer?
I mean, I never understood why the Japanese tried with the Armadas and now the Tundras.
This seemed to me more examples of manufacturers trying to follow the crowd’s fads rather than doing what philosophically they believed in and had success with for so long.
If you look closely, you will see their showrooms filled with to many large, low MPG vehicles…just like the Ford and GM’s are.
@ Katie Puckrik-
If investing in bad products (trucks and SUV’s) and failing to correctly forecast the market causes a profit and sales decline, it’s bad business. Period.
Just because the company in question has competitors doing an even worse job doesn’t excuse these numbers.
It’s a symptom of the bias posters have here that the response is “Well, Toyota’a a good company and GM is worse.”
An unbiased response that supports Toyota and acknowledges it’s past performance would be “Gee, I hope Toyota goes back to making smart decisions like it did a couple of years ago. They’re a strong company, they’ll be okay.”.
It’s pathetic that a company can see a $12 billion dollar drop in profits from bad decision making and the TTAC posting response is “GM is worse.”
As I’ve said before- there’s a bias here. It’s okay to have one, just don’t pretend it doesn’t exist.
Toyota will raise prices to keep its shareholders/stakeholders content and show that the are being proactive to the dilution of profits.
If vehicles do not sell in the US they will simply raise the incentives.
In Canada Toyota/Lexus lowered their prices to reflect the strenght of the Canadian dollar.
@Mj0lnir
Well said.
Toyota’s profits dropping 28% equates to Detroit sucking in many people’s minds.
There are enough topics about Detroit and its woes here, in this one we should keep it to Toyota’s.
Personally, I think its GREAT to hear some bad news about Yota. Keep it coming!
Thanks
Does anyone ACTUALLY read my posts or are people just reading what they want to see?
In my first post, I state that although Toyota’s dropped £2.3 billion (Mj0lnir, where did you get the figure $12 billion?), this is just an outlier. Toyota, this year, have raised their prices to reflect the rise in raw material costs; something which hurt EVERYONE’S bottom line.
If this time next year Toyota still posts another drop (or worse still a loss) then we can talk about Toyota “losing their way” or mismanagement. But for now, let’s just see how this pans out. Unlike GM, Toyota has not posted record losses or haemorraged market share. This is their first drop in profits for SEVEN YEARS and yet people want us to jump on Toyota! Admittedly, they cocked up some of their forecasting, but overall, they’re posting a £6 BILLION profit in a hard economy like we have now. So, overall, the picture isn’t too bad for them.
Also, this is a FORECAST from Toyota. So, we’re criticising them, for something that hasn’t happened yet!
In my second post, I talked about why I “hate” on the domestics. I don’t “hate” the domestics (I’ll come to that later), but I’m trying to show people that we jump on the domestics because after 8 years, they still haven’t got the message. We don’t pick on Detroit for a laugh! We criticise them because we’ve seen nothing that resembles a turnaround!
Again, people “coincidentally” missed the comment about me giving kudos to Ford, because they’re actually making progess in turning themselves around. But why let a fact like that get in the way of trying to make me look biased….?
ppellico, mj0lnir, Toyota brought out the new Tundra and Nissan, the Armada, etc, because people DO buy such vehicles. Why leave money on the table?
Further, if you get people into your trucks and they like them, perhaps they’ll buy your cars. More money.
Toyota probably didn’t accurately forecast owner loyalty nor the sharp drop in truck sales but they are still in the game and, most importantly, they do not RELY on truck profits to get by.
W-a-a-a-a-i-i-i-t a minute…
Toyota’s profits for 2008 were UP 4.5% (fiscal year ended March, 2008). We are looking at a FORECAST 28% reduction in profits for the fiscal year-end that’s nearly 11 months away.
Toyota could end up beating that forecast by a significant margin.
Very true Kixstart when the feet go up in the air and they stop moving and the eyes close for one or more of the former big three, their sales will go to the remaining companies standing. If Chrysler for example goes GM Ford and Toyota among others will all benefit.
KixStart
The reason I have always quietly admired the Japanese car companies is that while the American automakers followed trends with all their dollar and manufacturing mights, the Japanese invested into what they saw as the future.
It was economically and reliable cars.
Sure, they were catering to a few at the time, but they kept investing in this R&D.
They invested, and lost, money initially on the Prius…believing in what was to come.
THIS is why we should, after the lawyers, drown all the MBAs in Michigan.
Somewhere, during the 1960,70 period, the engineers, the car guys, got pushed out and replaced by the money guys…the MBAs!!!
Today, its all about the return on investment for the share-holders, NOT the best car for the future.
PLEASE return to the day when CAR guys ran the companies…not the MBAs from Harvard!
@KixStart:
Yeah, but how would the usual suspect pro-doms get their kicks out of that? The only good thing about a forum? The ignore function.
The headline needs to be changed. Pronto.
Katie- using today’s exchange rate of .009 dollar to yen, a 1.25 trillion yen drop in net profit equals about 12 billion dollars, unless I misplaced a decimal.
That is roughly equal to the 6 billion pound figure you quoted using todays .51 pound to the dollar rate.
I’m reading your posts. I disagree with your characterization of this as a blip, and I also fail to understand why we need to lambast GM when posting about Toyota.
Bad decisions are bad decisions.
“THIS is why we should, after the lawyers, drown all the MBAs in Michigan”
I’ve often THOUGHT we should drown dimwitted stiffs that use too many capitals and are envious of anyone with an education.
Mj0lnir,
It’s a drop TO 1.25 trillion yen, not a drop OF 1.25 trillion yen.
CarShark :
@KixStart:
Yeah, but how would the usual suspect pro-doms get their kicks out of that? The only good thing about a forum? The ignore function.
The headline needs to be changed. Pronto.
High-ho pronto! Away!
When you dig into the numbers, there is always something interesting to learn.
I looked at profit from China.
The Chinese joint ventures of Toyota brought in $1250 of net profit per vehicle (that’s called equity earnings) over the last year.
The other day I figured it was around $400 per vehicle for GM in Q1.
So, the Chinese joint ventures of Toyota bring in 3 times more profit per vehicle than the Chinese joint ventures of GM.
I thought you all would like to know that.
I don’t have any real brand loyalty. I’ve owned an Accord and hated it, being the most unfun vehicle I’ve ever owned. I’ve had an Avalon. Again, nice car, boring.
I’ve had/have a Wrangler, a Ranger, Grand Cherokees, a Liberty, a Ram, a Mustang, a Pathfinder.
I currently have an FX35. Nice car, yet so many “minor” issues with it like paint peeling or small rust spots or a cd player that no longer plays burned cd’s that it too is becoming unfun.
Basically, I’ve had just as many issues with imports as I’ve had with domestics, so I can hate them all equally.
However, I recognize that the decisions a car manufacturer makes don’t actually take affect until years later. It’s even longer before the general population starts to buy into those ideas.
Toyota is a great company who builds great (albeit nothing I get really enthusiastic about) cars. However, Ford and GM have made some strides to turn things around.
On the flip side, Toyota has made some mistakes as well (rushing the Tundra to market and having the reliability issues that come along with that rush, for example).
Putting things in perspective, Toyota has made an incredible run at GM to unseat them as the top car manufacturer. GM has been in that seat for a long time, all the while building a bunch of cars and trucks that many perceive as inferior to Toyota. It’ll be interesting to see if Toyota can maintain that momentum. We’re seeing signs of it slowing already.
In the end, the increased competition is good for all of us consumers. Sometimes I think the TTAC community is a little heavy on the anti domestic bias.
troonbop:
I’ve often THOUGHT we should drown dimwitted stiffs that use too many capitals and are envious of anyone with an education.
Hmmm…must have an MBA here.
Look, sorry to hurt your feelings but I need to point out that in fact I have two degrees, Philosophy and Religious Studies.
I know, I know…nothing to really brag about or make money with.
But it does help a LITTLE.
I also am a VP running a wonderful manufacturing company with my brothers with a brand well known throughout the world as the best.
And, we are all very pround that we have never hired an MBA.We have never hired anyone without the passion and the knowledge and love of our industry.
And, I am really, REALLY sorry for all the capitals.
KatiePuckrik :
May 8th, 2008 at 12:38 pm
Mj0lnir,
It’s a drop TO 1.25 trillion yen, not a drop OF 1.25 trillion yen.
My bad, dawg.
Reading comprehension > Mj0lnir.
Sorry about that.
Interesting info from Toyota’s conference call.
It’s about their production capacity.
At the end of the call they list Toyota’s production capacity in each region, as follows:
US+Canada 2.02M
Europe 805K
Africa 200K
Australia 100K
Asia, incl China 1.768M
South America 151K
Global total outside Japan: 4.9M
Japan 3.8M
Global total for Toyota: 8.7M for Toyota
These numbers exclude Daihatsu and Hino.
In Japan Toyota, Daihatsu and Hino produced 5.1M in the past year. Add this to the 4.9M production capacity outside Japan and you get: 10M.
In addition Daihatsu just opened a new factory in Japan and several more Toyota factories are coming online soon.
If I’ve understood this all correctly, Toyota already exceeds 10M and is closing in on 11M worldwide production capacity. That’s a lot!