Toyota reports 1st-quarter net income drop of 28%
Hurt by the weak dollar, the automaker's U.S. sales are down 7.6%, putting it in the same company as Big 3 manufacturers GM, Ford and Chrysler. Making a lot of SUVs and trucks didn't help either.
The brutal car market isn't just hurting the Detroit Three. Add Toyota Motor Corp. to the list of casualties.
The Japanese giant today reported a 28% decline in net income for its first fiscal year quarter, earning 353.7 billion yen ($3.2 billion), compared to 491.5 billion yen ($4.5 billion) in the year-earlier period.
The decline, coming off a similar slip in the fourth fiscal quarter reported in May, is a reminder of how critical the health of the U.S. market is to the large Asian carmakers as well as to General Motors Corp., Ford Motor Co. and Chrysler.
Sales are slumping for nearly all automakers in the U.S. and Toyota is no exception: Through July, sales are down 7.6% here, and the company's overall revenue for the quarter fell 4.7%, to 6.215 trillion yen ($56.8 billion). Its operating profit in the region fell 57%.
"The financial results for the quarter were severe, due to our rapidly changing business environment," said Mitsuo Kinoshita, executive vice president for Toyota, who, among other factors, pointed to raw materials prices as an additional factor in the profit slide.
Toyota's results come less than a week after GM reported a massive $15.5-billion loss; only a week earlier, Ford said it was $8.7 billion in the red, its largest-ever quarterly loss. On Friday, Nissan Motor Co., Japan's third-largest automaker, reported a 42% profit decline.
Toyota, Honda Motor Co. and Nissan have been gaining market share in the U.S., thanks to surging popularity of their small, fuel-efficient cars.
And although Japanese automakers tend to make small cars more profitably, and in higher volume, than their American rivals, the imports are suffering from the weak dollar. A year ago, the yen traded at about 118 to the dollar, but it dipped as low as 97 to the dollar in March, hurting profits on cars the companies import into the U.S., such as the Toyota Yaris.
Moreover, Toyota and Nissan have suffered, in the fashion of the Big Three, from making bets on trucks and SUVs. Both have been building large SUVs and full-size pickups in the U.S., and both have seen their sales in the categories slip into double digits this year.
Toyota has reacted to the slowdown by sharply cutting production of its Tundra pickups and Sequoia large SUVs, and closing its U.S. truck plants for three months starting in August.
Honda Motor Co., on the other hand, avoided the truck problem, sticking mainly to fuel-efficient sedans. That appears to have made a great difference for the company, which reported an 8.1% income gain for its fiscal first quarter, on a 2.2% revenue boost, late last month.
ken.bensinger@latimes.com
