The brutal car market isn't hurting just Detroit's Big Three automakers. Add Toyota to the list of casualties. The Japanese giant on Thursday...
The brutal car market isn’t hurting just Detroit’s Big Three automakers. Add Toyota to the list of casualties.
The Japanese giant on Thursday reported a 28 percent decline in net income for the first quarter of its fiscal year, having earned 353.7 billion yen ($3.2 billion), compared with 491.5 billion yen in the year-earlier period.
The decline, coming off a similar slip in the fourth 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, Ford and Chrysler.
Sales are slumping for nearly all automakers in the United States, and Toyota is no exception: through July, its U.S. sales were down 7.6 percent, and the company’s overall revenue for the quarter fell 4.7 percent, to 6.215 trillion yen ($56.8 billion). Its U.S. operating profit fell 57 percent.
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“The financial results for the quarter were severe, due to our rapidly changing business environment,” said Mitsuo Kinoshita, executive vice president for Toyota, who pointed to, among other factors, raw-material prices as contributing to the profit slide.
Toyota’s results come less than a week after GM reported a $15.5 billion loss; a week earlier, Ford said it had experienced its largest quarterly loss: $8.7 billion. Last Friday, Nissan, Japan’s third-largest automaker, reported a 42 percent profit decline.
Toyota, Honda and Nissan have been gaining market share in the United States with their small, fuel-efficient cars.
However, the imports are suffering under the weak dollar. A year ago the yen traded at 118 to the dollar, but it dipped as low as 97 to the dollar in March, hurting profits.
Moreover, Toyota and Nissan made bets on trucks and SUVs that haven’t paid off in the current economy. Both have been building large SUVs and full-size pickups in the United States, and both have seen sales in those categories slip this year.
Toyota has reacted to the slowdown by sharply cutting production of its Tundra pickups and Sequoia SUVs, closing its U.S. truck plants for the next three months.
Honda avoided the truck problem, sticking mainly to fuel-efficient sedans. Late last month it reported an 8.1 percent income gain in its first quarter, on a 2.2 percent revenue boost.