Toyota's profit declines for the first time in recent two years, global car market cools down!

JohnNov 07, 2024, 11:59 AM

According to the financial report released by Toyota on Wednesday, the company saw of its first quarter profit decline in two years, indicating the recent continuous rise in the performance of this Japanese auto giant has encountered obstacles. Specifically, Toyota's operating profit for the quarter ended September was 1.16 trillion yen (about $7.81 billion), a year-on-year decrease of 20% to 1.4 trillion yen, which is roughly in line with the average expected by nine analysts surveyed by LSEG.

Nevertheless, Toyota still maintains its full-year profit forecast at 4.3 trillion yen. Previously, due to the strong demand for hybrid models in major markets such as the United States, Toyota achieved substantial profits for several consecutive quarters. However, recent signs of a slowdown in sales and production have emerged, mainly due to intensified competition in the Chinese market and the rise of Chinese brands impacting Toyota. Also previous production stoppage of two models in the United States had short-term impact on production, notwithstanding the issues were already resolved. Additionally, declining sales and rising labor costs in the North American market (especially in the United States) have had a negative impact on Toyota's operating income.

It is worth to mention, in the third quarter of last year, Toyota was pointed out that the attractive data such as revenue and profit in its financial statements were also affected by the depreciation of the yen. The continued depreciation of the yen against the dollar may further embellish Toyota's financial statements this year, but if Japan shows a significant rebound in the yen exchange rate due to economic recovery, Toyota's financial statements may also be damaged as a result.

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