Toyota Breathes Easy


Toyota Motor Corp. recently announced the raising of its profit forecast for the year. This was done despite a decrease in its quarterly profit as the higher sales in the United States gave the Japanese carmaker remain positive despite the year of natural and man made disasters.

The company’s net profit fell by thirteen and a half percent to just 80.9 billion yen or about $1.05 billion in the last quarter of 2011. The year’s margins were deeply affected because of the production cutbacks resulting from the tsunami in Japan last March and the flooding of the Thailand manufacturing hub last July.

Despite the previous year’s disasters, the company increased the profit forecast to 200 billion yen or $2.6 billion from 180 billion yen. The increase was prompted by higher sales forecasts as it rolled out new versions of its very popular Prius gas-electric hybrid and the Lexus luxury vehicles throughout the world.

Toyota, especially with the new Camry, is hoping to regain some of the market share it lost to other carmakers such as General Motors and Hyundai in the previous year. This was due to the earthquake and the succeeding tsunami closed down factories that dried up supply to the worldwide market. This was then followed by the flooding in Thailand that again hampered production of the cars to the market.

Toyota’s overall sales for 2011 fell by seven percent in the United States and nearly 23 percent in Japan. This has helped make General Motors become the world’s largest automaker. Since hitting the bottom of the barrel, the company has been steadily increasing its production capacity, such as adding second shifts in its plants such as Blue Springs, Miss to help increase annual production to 150,000 vehicles. In 2008, the company put the construction of this very same plant during the 2008 financial crisis but eventually opened the plant for operations last October 2011.

Toyota’s largest market is the United States and sales has been increasing on an average of 7.5 percent in January, with nearly 56 percent of that increase was due to the Camry sedan. As for its home market of Japan, the company remains bullish after the Japanese government began providing tax incentives for cars with low emission levels starting December. This is expected to spur the flagging local market with an additional million new vehicles on the road.

The higher forecasts though does not come near to the heights prior to the most recent financial crisis. Another major issue was the recall of many of its top models because of faulty accelerator pedals. The profit forecast of 200 billion yen for 2012 is just a small percentage of the 2008 earnings of nearly 1.7 trillion yen. During that time, nearly nine million cars were sold in 2008, the record that remains for the company until today.