TOKYO — Toyota booked its first profit gain in six quarters and lifted its annual outlook by 15 percent as robust demand for higher-margin hybrid vehicles and a weaker yen offset a slide in sales in China and the Middle East.
Toyota has benefited from its focus on gasoline-electric hybrids, even as it faces considerable headwinds from competition from Chinese electric vehicle makers and higher fuel prices stemming from the Iran war.
Toyota said it now expects operating profit of ¥3.9 trillion ($24.6 billion) for the year ending March after posting a 34 percent increase in operating income to ¥1.13 trillion in the July-September quarter.
Unlike other automakers that went all-in on electric vehicles and later wrote down billions of dollars in investments when EV demand weakened, Toyota has focused primarily on advancing the hybrid technology it popularized with the Prius decades ago.
The strategy has been key to helping Toyota defend market share in the U.S., its largest market, and fend off fast-moving Chinese EV makers elsewhere.
While higher fuel prices are hurting consumer sentiment in China’s highly competitive auto market, Toyota is fighting back, Chief Financial Officer Yoichi Miyazaki told a briefing.
“We have been able to halt the decline in our market share and are now starting to regain some ground,” he said.
Toyota reduced its annual global sales target to 10.99 million vehicles from its previous forecast of 11.18 million. The sales outlook was lowered as Toyota continues to face a downturn in China, where foreign brands have steadily lost ground to domestic manufacturers led by BYD.
Toyota plans to debut the next generation of its Corolla in China. Executives have also hinted at launching an all-electric version, which would mark a major shift for the world’s best-selling car nameplate.
Toyota aims to boost sales in China by building a new factory in Shanghai, where it will produce Lexus-branded EVs beginning in 2027. Production at the plant is scheduled to begin in September, with the goal of reducing development times to 18 months, Miyazaki said.
China is increasingly setting the pace for the global auto industry in areas ranging from manufacturing and design to software and robotics.
Toyota accelerates robot development
Toyota also said it would establish a robotics business to provide robots for manufacturers and other industries, positioning the operation as a pillar of future growth.
The division will be led by Chief Production Officer Takefumi Shiga and is intended to accelerate the practical application, commercialization and deployment of robots on factory floors. The move consolidates Toyota’s robotics efforts under a single organizational structure.
Toyota said it plans to spend at least ¥22 trillion on research and development and capital investment through fiscal 2030 and to more than halve its net liquid assets to ¥7 trillion by March 2031 from end-March levels.
Takanori Azuma, Toyota’s chief accounting officer, said the company was offsetting the impact of tensions in the Middle East and rising material costs through stronger sales and cost-cutting efforts.
Share buyback increased
Toyota increased its planned share buyback to ¥1.3 trillion from ¥1 trillion and said it would spend up to ¥14 trillion on shareholder returns by March 2031.
The crisis facing traditional automakers is so profound that Toyota’s ability to stay the course is widely seen as a success.
“It was a decent quarter. There are some automakers that have reported terrible quarters so far,” said Christopher Richter, an autos analyst at CITIC Securities Japan.
“The fact that they raised guidance and announced additional shareholder payouts makes you say, ‘wow.’”
Toyota’s cash pile, which currently stands at about ¥9.5 trillion, has long frustrated shareholders, Richter said, adding that the automaker will need to continue returning more capital to investors to improve its return on equity.
Bloomberg contributed to this story
