Toyota Motor Corp. expects to post JPY1.78 trillion ($17 billion) in net profit in the fiscal year ending March 31, 2015, after logging JPY1.82 billion in net income in the fiscal year ended March 31, 2014. Toyota expects its results to be hurt by slumping demand in Japan, stiffer rivalry in the United States, and the Japanese yen that has started to stabilize.
The carmaker’s results for the previous fiscal year were thanks to a weaker yen boosted the value of sales from Japan-sourced Prius hybrids and Lexus vehicles. With the yen losing its streak, Toyota as well as Honda Motor Co. are expected to post smaller-than-estimated earnings.
Toyota and Honda are bracing for a record dive in local demand as Japan commenced its first sales-tax increase in nearly two decades last month. Tatsuo Yoshida, an automotive analyst for Barclays, told Bloomberg by phone that the “tailwind is over" for Toyota.
He said it is hard to assume flat sales or even growth in Japan due to of the “hangover from last fiscal year." Toyota’s 89.5-percent surge in net income was mainly attributed to economic policies initiated by Japan Prime Minister Shinzo Abe that helped weaken the yen by 8.7 percent against the dollar in the 12 months ending in March.
Toyota also has to hurdle a number of barriers like recalls due to safety issues, including a recent call back of over 6 million vehicles like Camry sedan and RAV4 SUV, and February recall of 1.9 million Prius hybrids.
Toyota has reached an agreement pay a $1.2 billion penalty to end a US criminal probe into sudden unintended acceleration issues with it vehicles.
Toyota has seen its sales in the US grow at a slower rate than the overall market in the first four months of 2014, with sales of Camry dropping by 0.2 percent. The carmaker also saw sales of the Prius dropped 18 percent so far this year. [source: Reuters]