Report: Toyota frets as North American profits plunge

[Tragic Bronson]

http://www.autonews.com/article/20170213/OEM/302139997/1128

Slowing demand, shift to trucks, Trump take toll

TOKYO -- Toyota Motor Corp.'s reliable cash cow, the North American market, is suddenly a swirl of uncertainties.

Operating profit in the region plummeted 53 percent in the latest quarter, helping trigger a double-digit plunge in Toyota corporate earnings.

Foreign exchange rate losses bit the hardest. But slowing market demand, the market shift toward light trucks and a rush of vehicles coming off lease are combining with uncertainty about Trump administration trade policy to cloud Toyota's outlook.

In announcing earnings for the company's fiscal third quarter ended Dec. 31, Managing Officer Tetsuya Otake warned last week that U.S. incentives are rising and residuals are falling.

"Competition has intensified in the market. Incentives in the market trended upward," Otake said, adding that Toyota expects the overall U.S. market to decline about 2 percent in calendar year 2017 after a record finish in 2016. "We expect a tough used-car market going forward."

North American regional operating profit dropped by more than half to ¥70.6 billion ($604.9 million) in the quarter. Sales in Toyota's biggest market rose 2.3 percent to 745,000 vehicles. The results were hurt by foreign exchange losses and outlays for declining residuals.

Otake conceded the company was slow to react as U.S. consumers stampeded away from cars toward light trucks as gasoline prices dropped and tastes changed.

Hot-selling light trucks accounted for just 53.2 percent of Toyota Motor Sales U.S.A.'s volume last year. But trucks gobbled 60.7 percent of U.S. sales industrywide. Toyota Motor Sales' car volume fell 12 percent for the year, while its truck sales gained 8.8 percent.

Otake said increased capacity for pickups, crossovers and SUVs should bolster sales going ahead. Toyota also will get a boost in the coming year from the arrival of the C-HR subcompact crossover, which targets a sweet spot in U.S. demand, and from a redesigned Camry sedan, he said.

Toyota lifted its North America wholesale outlook for the current fiscal year by 20,000 units to 2.84 million vehicles. But the new target is essentially flat with the 2.839 million Toyotas sold in North America the previous fiscal year. Toyota Motor Sales started the new year on a weak foot, with U.S. volume falling 11 percent to 143,048 vehicles in January.

At the parent-company level, Toyota reported a 39 percent tumble in operating profit in the fiscal third quarter as huge foreign exchange losses and higher expenses offset higher sales.

Operating profit plunged to $3.76 billion, while net income dropped 23 percent to $4.17 billion in the October-December period.

Worldwide revenue declined 3.5 percent to $60.7 billion in the quarter, even as global retail sales advanced 2.9 percent to 2.28 million vehicles.

 

[Gecko]

Sometimes Toyota acts really... well.. stupidly.

Demand shifts to light trucks and they give us a 2018 Tundra and Sequoia with a new grill. After a decade.

The 4Runner should be redesigned this year and the news isn't looking good on that.

I hope they're confident enough in Highlander, Rav4 and Tacoma, because that's what they have to carry them forward.

We should have had a new Tundra for 2016, a new Sequoia for 2017 and a new 4Runner for 2018... but Toyota thought they could try to shove Camrys, Corollas and Rav4s down everyone's throat. Let's not forget that Ford just redesigned the Expedition and will be coming out with a new Ranger and Bronco soon, and rumors are that GM is considering a new BOF SUV to go up against the Wrangler. Also, BOF Grand Wagoneer.

I'm really annoyed with Toyota lately...