Originally Posted by spwolf
another recall would be a lot bigger news
This made the news on TV this morning.
TOKYO — Toyota Motor said Tuesday that its net profit had slumped 39 percent in its third quarter from the same period a year earlier, weighed down by slow sales at home and the strong yen.
Still, the world’s biggest automaker raised its full-year net profit forecast for its business year, which ends in March, citing bigger-than-expected sales in emerging markets.
Toyota said profit for the October-December quarter had come to ¥93.6 billion, or $1.1 billion, down from ¥153 billion in the same period the previous year, hurt by declining sales in Japan after the government ended subsidies for environmentally friendly cars in September.
That helped push Toyota’s overall global sales down 11.7 percent to ¥4.7 trillion.
But the automaker, which is based in Toyota City, Japan, raised its profit forecast for the financial year ending March 31 to ¥490 billion from an earlier estimate of ¥350 billion.
It said brisk sales in Asia outside Japan had helped offset falling sales at home and the lingering effect of record recalls last year, which hurt the automaker’s share in the United States.
Toyota sales in Asia, excluding Japan, rose 21 percent to 335,000 units in the quarter, it said. In China, sales are expected to reach 900,000 vehicles this year, from 840,000 in 2010.
The automaker raised its forecast for global auto sales for this financial year to 7.48 million vehicles, up from its earlier forecast of 7.41 million. In 2010, Toyota led global vehicle sales for the third straight year, despite a strong postbankruptcy turnaround by General Motors.
The yen, which remains near a 15-year high, continues to sap Toyota’s profitability, however. A strong yen erodes the value of its overseas earnings and makes its Japanese-made cars more expensive overseas.
The automaker has been particularly affected by foreign exchange rates because it still has a sizable network of 17 assembly plants in Japan. Toyota exported more than half of the cars from those factories last year, losing money on many of them. For every one yen the currency appreciates against the dollar, Toyota loses about ¥30 billion in earnings, according to the automaker.
“There is no magic bullet” for Toyota in overcoming currency woes, Takahiko Ijichi, senior managing director at Toyota, said in Tokyo. He said Toyota would continue to expand sales of cars made outside Japan, as well as models with higher profit margins. Toyota has responded in some regions by raising prices. Cost-cutting efforts were also helping to bolster its bottom line, he said.
Sales in Japan fell after the Japanese government ended a subsidy program that had spurred sales of fuel-efficient cars. Sales dropped to 861,000 units in the third quarter from 1.06 million a year earlier, Toyota said.
Sales in North America fell to 507,000 vehicles in the last quarter from 642,000 a year earlier, Toyota said, though operating income in the region increased. For this financial year, Mr. Ijichi said Toyota expected to sell at least 1.9 million cars in North America
Quality at Toyota has been in the spotlight since a series of major recalls in the last two years, the largest of which were related to complaints about sudden acceleration. U.S. regulators fined the company $48.8 million for having reacted too slowly on that matter and on a separate 2005 recall.
Later Tuesday, the U.S. government was to release the findings of its investigation into reports of sudden acceleration in Toyota vehicles. The Transportation Department and NASA have been studying the safety issues that led Toyota to recall about 11 million vehicles since the autumn 2009.
The president of the company, Akio Toyoda, has pledged to be more responsive to customers and to initiate recalls more quickly than in the past. Toyota also installed a quality chief for North America and other regions and has said that local executives will have more authority to order recalls. Toyota made 18 separate recalls in the United States last year, twice its previous record.
The frequent recalls, however, are compounding the company’s image problems. A recent survey by Consumer Reports, a nonprofit publication, measuring perceptions about automakers showed that the recalls had significantly affected Toyota’s reputation for quality.
“We’re still only halfway there, but we will continue to improve,” Mr. Ijichi said. “But I believe our wounds are about half healed.”
Toyota is also trying to burnish its reputation as a leader in environmental technology, an image increasingly under threat from rivals like General Motors and Nissan, which started selling electricity-powered vehicles last year. At the Detroit Auto Show in January, Toyota announced that it would expand its lineup of gas-electric hybrid cars.
Shares in Toyota closed at ¥3,490, unchanged from the previous day, in Tokyo trading before the earnings announcement. Toyota shares have risen 8.4 percent in 2011.