Toyota reports booming sales but stays cautious on profit because of various costs
FILE - New Toyota vehicles are stored at the Toyota Logistics Service Inc., their most significant vehicle imports processing facility in North America, at the Port of Long Beach in Long Beach, Calif., Wednesday, March 26, 2025. (AP Photo/Damian Dovarganes)
Japan's top automaker Toyota reported record sales for the fiscal year through March on Thursday, but its profit for the latest quarter faltered partly because of a certification scandal.
Toyota Motor Corp.'s January-March net profit totaled 664.6 billion yen ($4.6 billion), down from 997.6 billion yen the same period a year ago. Quarterly sales totaled 12.36 trillion yen ($85.9 billion), up from 11 trillion yen.
Toyota has been strengthening the testing system of its vehicles after acknowledging wide-ranging fraudulent testing, including the use of inadequate or outdated data in crash tests, incorrect testing of airbag inflation and engine power checks.
Akio Toyoda, Toyota's chairman and the grandson of the automaker's founder, has apologized. The wrongdoing did not affect the safety of vehicles already on roads, which include the popular Corolla subcompact and Lexus luxury vehicles.
But the scandal has been a major embarrassment for a manufacturer whose brand has been synonymous for decades with quality and attention to detail.
For the fiscal year through March, Toyota reported a 4.77 trillion yen ($33 billion) profit, down from 4.94 trillion yen the previous fiscal year.
Annual sales reached a record 48 trillion yen ($333.6 billion), up from 45 trillion yen. Toyota is forecasting sales of 48.5 trillion yen ($337 billion) for the fiscal year through March 2026.
Its profit forecast was less bullish, citing costs to meet carbon neutrality demands, as well as the impact of President Donald Trump's U.S. tariffs on operating income, which was factored in tentatively at 180 billion yen ($1.3 billion), according to Toyota. That estimate covers April and May, meaning it could grow in coming months.
Consolidated vehicle sales for the fiscal year through March totaled 9.36 million vehicles, down slightly from 9.44 million vehicles the previous fiscal year.
Cost reduction and marketing efforts worked as pluses countering the negatives, including the production shutdown spanning several months in the U.S. due to quality issues, Toyota officials said.
Toyota also said the portion of electric vehicles it was selling was steadily growing. Sometimes Toyota has been criticized as falling behind in the global move toward EVs, partly because it has an extensive lineup of other kinds of green cars, including hybrids.
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As I wrote last year, the safety "scandal' for which investors were willing to vote him out was a nothingburger that had zilch in common with the management-led fraud of Volkswagen's Dieselgate. The issue was little more than corners being cut and once retested, all vehicles passed with flying colors. This was a safety scandal that not only didn't involve a single fatality, but didn't even involve a single accident. Contrast with, say, U.S. authorities' probe of Tesla's automated driving feature. Another concern is informal family control of public companies, common in Japan while raising eyebrows elsewhere. But investors should relax: From Capcom (with the stock price having risen by 14 times since Haruhiro Tsujimoto, son of founder Kenzo, took over as president in 2007) to Sanrio (up 12 times since 2020, when Tomokuni Tsuji took over from his grandfather), there's plenty of evidence to show it can work. In past years, investors were also unhappy with the pace of Toyota's plans to electrify. Akio became a convenient lightning rod for all kinds of opposition, with the likes of Greenpeace piling on to dismiss its efforts to decarbonize. But this COVID-19-era obsession with full electrification at all costs seems now as quaint as the same period's nonfungible tokens boom. Today, competitors have been forced to retreat from their grandiose plans to abandon internal combustion engines, while Toyota has gone from strength to strength due to its hybrids and unwillingness to bow to the tyranny of the majority. Indeed, through his promotion of hybrid technologies, Akio may well have done more for emissions than any single executive on earth, with Toyota estimating its vehicles have reduced global emissions of carbon dioxide by nearly 200 million tons. In other realms, it's understood that executives shouldn't let perfect be the enemy of good. Yet Akio rarely gets afforded this leeway. 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