Written by Daniel Leussink
TOKYO (Reuters) – Toyota Motor is expected to drop its profit for the first time in two years when it reports second earnings on Wednesday, indicating a need to cool down after a bumper earnings boost helped by consumers’ shift to electric cars.
The world’s largest automaker is expected to deliver about $8 billion in quarterly operating profit, benefiting as drivers in several major markets opt for fuel-cell hybrids, which often command higher profit margins than conventional gasoline vehicles.
However, the latest sales and production figures showed a slight decline for Toyota. It faced suspension of deliveries of two models in the United States and, like global rivals, faces intense competition in China, the world’s largest auto market and where demand for EVs is not slowing down.
The Japanese automaker is expected to report a 14% drop in annual operating profit in July-September, to 1.2 trillion yen ($7.9 billion), according to an average of nine analyst estimates in the LSEG survey.
That would mark its first profit drop since the same quarter in 2022. It has already said that global sales for the quarter were down 4% from a year ago and that output was down 7%.
Toyota’s strategy to expand its hybrid inventory in the US could make it less vulnerable to any reductions in EV subsidies or similar policy changes in Washington depending on the outcome of this week’s US presidential election.
Hybrids accounted for 41% of Toyota’s global sales in July-September, or 1.1 million vehicles, including the flagship Lexus model, compared with 33% in the same period last year, according to company data.
Among the popular automakers, Toyota is considered one of the slowest to adopt EVs. Battery-only electric vehicles made up just 1.5% of global sales in the first nine months of the year.
Toyota Chairman Akio Toyoda last month argued that an EV-only future could lead to job losses across the auto industry.
Toyota did not change its full-year profit estimate when it reported earnings for the April-June quarter, predicting a 20% drop compared to the previous financial year in expected investments in both its strategy and its suppliers.
Toyota shares are up 3% so far this year. In US dollar terms, they rose 2%, compared to a 2% decline for EV rival Tesla over the same period.
($1 = 152.1200 yen)
(Reporting by Daniel Leussink; Editing by David Dolan and Christopher Cushing)
Source link
