The weak yen has allowed Toyota to fight off the financial impact of a slide in car sales and a certification scandal, lifting June quarter earnings 1.7% to a new all-time high for the three-month period.
Without a massive US$2.5 billion boost from the weaker yen, the car giant would have seen a sharp fall in earnings for the quarter.
Toyota stuck to its forecast for a near 30% slide in earnings over the year to next March—its financial year.
First-quarter profit at the world’s biggest automaker rose to 1.33 trillion yen (US$8.9 billion), from 1.31 trillion yen in the same period a year ago. Quarterly sales jumped a solid 12% to 11.8 trillion yen (US$79 billion), driven by a weaker yen. The weak yen helped as it boosted US dollar sales when converted to Japanese currency in the company’s accounts.
The greenback has been trading at above 160 yen in recent weeks, although it slid below 150 yen after the Bank of Japan eased its key interest rate this week. The yen traded through the range of 152 yen to the US dollar on April 1 to 162 yen on the final day of the quarter. In the same period of 2023, the yen traded through a range of around 134 yen at the start of April to around 142 yen at the end of June.
The currency fluctuations added 370 billion yen (US$2.5 billion) to operating profit for the period, according to Toyota Motor Corp. Cost reduction efforts by the company boosted operating profit by 55 billion yen (US$367 million).
Production in Japan was halted on some car models earlier this year after the government found irregularities in documentation for certification approval. This week, Toyota was dealt its first-ever corrective order by Japan’s transport ministry, after a government investigation found that seven of its car models weren’t properly tested for mass production. The order is the latest development in a scandal involving a series of improper behaviors that began with two Toyota subsidiaries half a year ago, then last month at the carmaker itself.
Toyota has apologized for the misconduct and said efforts were underway to resume production.
Demand for Toyota’s popular hybrid models remained especially strong. Hybrid models deliver fuel efficiency by switching back and forth between an electric motor and gas engine. Sales boomed in the North American market.
But Toyota sold fewer vehicles around the world during the latest quarter at 2.25 million vehicles, down from 2.3 million vehicles last year. Toyota expects to sell 9.5 million vehicles around the world for the full fiscal year. When including group companies like Daihatsu Motor Co., which makes small models, and truck maker Hino Motors, annual global sales are expected to hit nearly 11 million vehicles, according to Toyota.
Sales in China fell sharply because of an absence of electrified vehicles.
Toyota stuck to its profit forecast for the full fiscal year through March 2025 at 3.57 trillion yen (US$24 billion), down nearly 28% from the previous fiscal year.
Last week, Japanese rival Nissan Motor Co. reported a 73% decline in quarterly profit, although sales edged up 3%. Honda Motor Co. reports earnings next week.