Toyota Profit Rises 11% to $5.09 Billion On Strong Sales

Light trucks are huge
Toyota showroom
(Photo: Reuters)

Toyota Motor Corporation said its worldwide operating profit jumped 11 percent in its fiscal second quarter but is also seriously considering revamping its line-up in the United States to include more light trucks and fewer passenger cars.

It's looking at its vehicle line-up and might ditch some models in a market increasingly dominated by light trucks, or vehicles with a gross vehicle weight up to 3,860 kg and a payload capacity up to 1,815 kg. Toyota North America CEO Jim Lentz said his company won't abandon passenger cars, however, but is looking at other vehicle types such as convertibles and coupes.

North American wholesale deliveries slid one percent to 665,000 vehicles from July to September. On the other hand, regional operating profit rose 12 percent to 518.1 million.

Lentz said Toyota is taking a hard look at all of the segments that we compete in to make sure the company is competing in profitable segments, and that its products have strategic value. He made these statements after the parent Japanese firm reported on its operating results for the fiscal second quarter.

Toyota Motor, Japan's biggest automaker, said operating profit rose to $5.09 billion in the automaker's fiscal second quarter ended Sept. 30. Net income grew 28 percent to $5.15 billion while revenue improved 2.3 percent to $64.3 billion.

Global retail sales numbers increased 1.9 percent to 2.68 million vehicles in the July to September quarter. This total included sales by Toyota's Daihatsu small-car subsidiary and Hino, its truck-making affiliate. Worldwide wholesale volume crept upwards 0.4 percent to 2.18 million vehicles.

Toyota Senior Managing Director Masayoshi Shirayanagi partly attributed the quarter's upbeat results to a richer mix of more profitable models. Toyota is focusing on the booming global demand for crossovers, SUVs and other light trucks.

Profits were also helped by Toyota's new vehicles using the company's modular platform called the Toyota New Global Architecture. Toyota also refined its incentive strategy into a more tailored approach.

The Toyota brand's average U.S. expenses are down $145 per vehicle this year and are $1,200 below the industry average, said Shirayanagi.

Toyota lifted its earnings outlooks for the current fiscal year ending March 31, 2019, on the back of improved sales and a forecast for more favorable foreign exchange rates,

Toyota now expects operating profit to break even from 2018. It earlier predicted a 4.2 percent decline in full-year operating profit. Toyota now sees a 7.8 percent decline in net income, a less severe decrease than the 15 percent drop it originally forecasts.

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