Toyota forecasts profit increase

Photo: Francois Lenoir

Photo: Francois Lenoir

Published May 8, 2015

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Tokyo - Toyota Motor forecast profit will surpass last year’s record 2.17 trillion yen ($18 billion) as the carmaker resumes its global expansion amid rising sales in the US and China.

Net income will probably rise to 2.25 trillion yen in the fiscal year ending March, the company said in a statement on Friday. The projection trailed the 2.43 trillion yen average of 27 analyst estimates compiled by Bloomberg.

President Akio Toyoda is putting an end to a period he’s described as an intentional pause at Toyota by building car factories in Mexico and China before the end of the decade. Since the grandson of the company’s founder banned adding new assembly plants in 2013, Toyota has boosted efficiency, revamped crucial models such as the Camry sedan and put its Lexus brand back in contention for the US luxury-market crown.

Toyota continues to fend off Volkswagen AG to remain the world’s top-selling automaker, leading by about 100 000 vehicles through the first three months of 2015. It maintained an edge despite reporting a 2.5 percent sales decline from a year earlier, while Volkswagen posted a 1.8 percent gain.

Falling sales in Japan are forcing Toyota to look elsewhere for growth to sustain its lead. The company’s deliveries in its home market plunged 14 percent in the first quarter of the year.

Last month, Toyota said it will spend about $1.4 billion to build factories in Mexico and China. The plant additions will boost production capacity by about 300 000 vehicles by 2019. The company also said it’s working with its other joint-venture partner in China to further ramp up output.

GM, Volkswagen

Toyota is facing a production capacity crunch in North America and has trailed competitors including Volkswagen and General Motors in China in part thanks to its relatively limited local manufacturing presence.

The carmaker sold 1 million vehicles in China for the first time in 2014, two years behind schedule. Volkswagen and GM each outsells Toyota locally by three to one. Toyota’s expansion in China will still be modest compared with Volkswagen, which plans to be able to make 5 million vehicles annually by 2019.

In the US, sport utility vehicles including the RAV4 and new Lexus NX have paced Toyota’s TK percent sales increase this year through April. The gains are putting the company on pace to have its best year in the market since 2007 and putting Lexus back in the mix with luxury leaders BMW AG and Daimler AG.

Rising deliveries in overseas markets have been a boon to Toyota as Prime Minister Shinzo Abe’s economic policies have helped weaken the yen. It’s projected to earn more profit than all of Japan’s other carmakers combined, including Honda and Nissan.

Bloomberg

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