Toyota’s Solid Performance in North America Fuels Profit

Toyota Motor Corp. powered through a car-market halt and put on record the solid profits in its fiscal third quarter, but it raised concerned in China by the virus outbreak. Toyota, the world’s biggest car maker by market capitalization, recorded operating profit of $5.96 billion in the October-December quarter, somewhat below last year’s numbers. The quarterly profile would have been as much as $900 million higher than a year ago, the company said.

Operating profit in North America quadrupled during the quarter even though unit sales slightly decreased.  Looking back on Toyota’s shift to higher-margin trucks and sport-utility vehicles, roughly two-thirds of Toyota vehicles sold in the U.S belong in that category. The popularity of models such as the Highlander SUV and the Tacoma pick up has increased. In North America, “we are selling more trucks than before because we shifted to more trucks including in our production volume,” said Didier Leroy, an executive vice president.

In comparison, Toyota’s somewhat healthy performance contrasts with the challenges of U.S. and Japanese competitors including Ford Motor Co. which said this week that its fourth-quarter operating income sank by two-thirds. Subaru Corp’s operating profit decreased 42% in the most recent quarter. Toyota somewhat raised its projected profit for the current fiscal year, which ends in March, but said it hasn’t yet taken into consideration the possible impact of the coronavirus outbreak emanating from China. Masayoshi Shirayanagi, head of public relations, said Toyota factories in China are going to remain closed, and they still remain uncertain when the restart date will be.

He expressed concerned about some workers returning from visiting families during the Lunar New Year holiday, especially those coming from the center of the virus outbreak which is the Hubei province. “Some provinces are ordering people to stay at home for 14 days after they come back from other provinces. We’ll have to take that kind of thing into account and look at parts procurement and the logistics situation before deciding when to restart,” Mr. Shirayanagi said. He said factories outside China, including those in the U.S. and Japan, were operating normally and any potential shortages of parts from China have not had an impact. However, he was not sure that would continue. “We’re examining every part one by one, looking at inventories and how the possibility or necessity of alternative production,” he said.

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