Toyota posts higher than expected quarterly profits
Toyota has just released its earnings report for the quarter spanning April through June and the Japanese automaker has posted an operating profit of $4.45 billion. Toyota's profits even beat the optimistic projections of most analysts. Its North American outfit accounted for a little over $1.2 billion of the company's quarterly profit. These numbers will no doubt be heavily compared to General Motors' unadjusted loss of $3.2 billion last quarter and Ford's $254 million loss. Though GM's loss appears to be horrific, the one-time cost of buying out 30,000 employees and other special items account for most of the red ink. Minus those items, GM actually posted a profit of $1.2 billion that also beat analysts expectations and sent its stock surging. Ford, however, whose Way Forward Plan was expected to produce a modest profit last quarter, is being forced to redouble its turnaround efforts after the unexpected loss.
[Source: Reuters]
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Reader Comments (Page 1 of 1)
GhostDoggy 7:54AM (8/04/2006)
And I am sure someone is going to say 100% of those profits went to Japan, too. Because there ain't no such thing as a Toyota dealership or service department making profits, in the USA.
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All World Automotive 8:19AM (8/04/2006)
Just another nail in the coffin for Detroit. Ever notice the bad media on Detroit and the good media on Japan. When will Detroit wake up?
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Sean 8:45AM (8/04/2006)
I am really impressed that Toyota can post profits like that. However I think that some of the recent success of Toyota can be attributed to being in the right place at the right time. Toyota has consistantly produced vehicles that get better than average gas mileage to accompany their SUV's that dont get better than average gas mileage. With the increase in gasonline prices, consumers have been looking for better mileage vehicles and Toyota already had a large offering of vehicles. Ford and GM were not prepared for this shift in consumer mentallity, and are struggling to bring vehicles to market that follow customer wants.
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George Kowalski 9:00AM (8/04/2006)
Funny, my 2005 Toyota 4Runner gets 21.4 mpg at a speed average of 26 mph and around 2 mpg better on the highway at 60 mph. My Jeep Liberty used to get me 16 mpg running at the lower speed limit, While my 2000 Mountaineer with a V8 got me around 15mpg. My 4 Runner gets better gas mileage than a friend's 2005 Mustang with a V-6, who says he averages between 16-18 mpg. My 2007 Camry V-6 goes from a low of 24mpg to a high of 33 mpg.
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_O ^ O_ 9:00AM (8/04/2006)
Why do people keep saying that GM made a profit IF you dont consider the one time write offs. As if this makes GM's situation better.
If GM didnt write them off they would have had to pay their salaries, keep them working producing cars that wont sell, and then lose more money by discounting the surplus of cars.
Aside from Trucks, GM still doesnt have a competitive product line-up. Which means they're still headed towards oblivion. Accounting tricks wont change that.
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Whydrive 9:05AM (8/04/2006)
GhostDoggy, dealerships/service centers are independent businesses from auto manufacturers. The profit that Toyota the company reported does not go to the pockets of the dealerships. If Toyota makes such high quality cars, how can service centers make any money?
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Lithous 9:16AM (8/04/2006)
"And I am sure someone is going to say 100% of those profits went to Japan, too."
Out of $4.5B, $1.2B is all of North America. I don't think that as much as you and most other import fanboys think are going to go back into America specifically.
"Because there ain't no such thing as a Toyota dealership or service department making profits, in the USA."
Service department? No, no money is ever made in a Toyota service department. It is IMPOSSIBLE. They never break down. But on a serious note, that arguement you give only really matters in 3rd world countries where they don't have their own car manufacturers. I mean, if it wasn't the Toyota dealer making money it would be the GM or Ford dealer. It is displacement of profits (to another company) not creation. Especially if you think of the incorrect stereo type that American cars break down more. Then the profits would be more to Americans at the American dealerships in the service department, correct? So they are taking profits away from America there (from the incorrect import fanboy point of view I see on autoblog constantly). Then add the fact that domestic dealerships get much higher customer satisfaction rating then maybe those import dealerships don't deserve they profits they make. Hmmmm.
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Oscar 9:19AM (8/04/2006)
Letter to Detroit's CEOs,
I am officially calling you out nationally. I'll bet $1 with each one of you that if you do the following you will be all right.
1 - keep a vehicle's life cycle to no more than 4 years.
2 - refresh interiors and exteriors every 2 years.
3 - Consumers want a quality and durable interior, after all that is where they spend most of the time when using a car so use good materials. Vehicles don’t have to be expensive to have a quality interior (Jetta).
4 - Cars should be design driven, good engineering is important but will not produce exciting vehicles.
5 - DO NOT cut corners, (i.e.-engine compartment) whenever you think "buyers won't notice that", they do, that is one reason they're buying vehicles like BMW and Toyota, the total experience of owning a quality vehicle, top to bottom, very balanced approach.
6 - Change the culture in your companies, promote younger, passionate people (think Apple); remove dead weight (think the old IBM).
7 - Or just hire me and I'll guide you in the right direction.
If you follow these steps and succeed I will pay each one of you $1. If you fail...well you know the consequences.
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mikesright 9:24AM (8/04/2006)
_O^0_, GM will never have to pay that expense but once. Also GM paid their salaries in the third quarter as well. With this said, the accelerated attrition program will be a major component of GM's cost cutting, which will help the company with $2.25 billion in savings/qtr.
Also GM is not relying on trucks alone to jumpstart sales, and they have many new improvements and entries. The Malibu, Aura, G6 are all getting improvements or refreshes, as well as the Aveo, the Enclave, Outlook, and Acadia also are going to provide some solid growth in the crossover market. GM's marketshare by month has now stabilized to 27% with current product, and since they have new product coming out this year representing 40% of sales, I would say they have a decent chance of pulling themselves past 30% for the first time in a while by the end of the year. As they are already profitable by operations, the added volume/less incentives should help them beat Toyota's profitability by the end of this year. 1.2B (profits in latest qtr) + 2.25B (cost cuts) + 2B(volume gains) = 5.45B (profits in Q4)
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Lithous 9:32AM (8/04/2006)
"Funny, my 2005 Toyota 4Runner gets 21.4 mpg at a speed average of 26 mph and around 2 mpg better on the highway at 60 mph."
No, what is really funny is that Toyota thinks your vehicle should get at most 22MPG with the most fuel efficient model. Look at the numbers. If you drive conservative and get better than Toyota claims (2MPG better than 21.4 *is* better than Toyota claims) then driving a Tahoe or Suburban even could get you the same MPG since they start out rated nearly the same as your 4Runner.
http://www.toyota.com/4runner/specs.html
http://www.chevrolet.com/fueleconomy
The Tahoe and Suburban have displacement on demand, don't tell me driving conservately will do well on that setup.
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Lithous 9:53AM (8/04/2006)
But what no one seems to write an article about is this...
GM writes off a one time cost to pay 30K employees and it turns their $1.2B profit into a $3.2B loss. That is $4B/30K employees. GM had 600K direct in the U.S. employees in 1979. The Japanese when building in Japan (as they still do believe it or not) had no healthcare (and possibly pension) to pay because the Japanese gov't took care of it.
Thinking of the $$ numbers in this case are mind boggling.
Oh, yeah, to the guy that stated "think Apple". Does that mean having (only) one very successful product (market share-wise) which isn't technically the best and has known issues (like battery life and batteries that can't be replaced by the consumer, screen problems and propriety cables like their video cable which is an RCA cable on one end with video and one of the sound switched do they could maximize profits and f the customer) and, oh, yeah, "Made in China" on their products.
Yeah, that's it. Think Apple. Then think again.
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Ken 10:01AM (8/04/2006)
Hey Oscar (#8), Why didn't you leave your address and/or phone number? How are they going to get a hold of you to take you up on your bet?
I am impressed with Toyota's ability to make such huge money on the same types of cars that Ford & GM lose money on everyone they make, or at least they used to.
However, does anyone know what type of retirement packages Toyota offers their workers, if any? It's well documented that the Big 2 and DCX have incredibly bad UAW contracts, and are paying HUGE retirement moneys to retirees. My question is will Toyota face this in the future? I'm sure they're not dumb enough to sign the types of contracts that the domestics did, but I am just curious if anyone knows?
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djSyndrome 10:17AM (8/04/2006)
"If Toyota makes such high quality cars, how can service centers make any money?"
Scheduled maintenance says hi.
And as far as mileage goes, I regularly exceed my posted figures for my '03 Matrix (although the figures were mysteriously raised for '04). It's rated at 25/30; I pull 27 around town and 33-34 on freeway trips.
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Oscar 10:25AM (8/04/2006)
#10,
Apple is just an example of a company that promotes non-conventional thinking/culture, the point is not to debate their number of successful products but to illustrate the type culture that is needed in detroit. If you don't like the example you can pick a different one, how about Samsung?
The point is our car manufacturers have been successful in the past, we all know this, but consumers are choosing other than American vehicles so Detroit needs to lure them back with vehicles that are better than (fill in the blank) and their current old IBM mentality is destroying them.
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rwdmtparkingonly 11:13AM (8/04/2006)
Legacy smegacy - GM and ford have been making incredibly well designed and competitive cars for the last thirty years, they just haven't been nice enough to sell them in this country; now they're paying for that.
Australia got full size rwd Opels with small blocks thrown in (Holden) while GM tried to force us to choose between horribly implemented front wheel drive cars or outdated body on frame boats. Look what has been happening:
Australia: http://www.holden.com.au/www-holden/jsp/corporateinfo/companyprofile/companyprofile.jsp?link=service
US: http://www.detnews.com/2005/autosinsider/0501/06/A01-50668.htm
Now that the American car companies have found that Americans are not as stupid as they thought they are starting to bring their American offerings up to par, and hopefully they'll make it. If they don't it will be because of the low margins that they have to accept on the crap they've been selling, not the cost of honoring obligations to their employees.
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George Kowalski 12:14PM (8/04/2006)
"No, what is really funny is that Toyota thinks your vehicle should get at most 22MPG with the most fuel efficient model. Look at the numbers"
When I bought the 4 Runner, the salesman told me that the Toyota mpg numbers were conservative and that I would be getting slightly better mileage. At the time, I thought that this was just salesman talk and was suprised when the mileage was higher than the sticker showed. I was suprised since I usually got less than what the sticker showed in my previous SUV purchases from Chrysler and Ford. The Jeep Liberty mpg was sad when looking at the size of the vehicle but it did carry a lot of weight. I also get higher highway MPG numbers in the Camry than what the sticker shows. I don't think that these numbers can be extrapolated to fit other SUV manufacturers. I think that the accurate MPG figures that Toyota gives their customers is appreciated by those customers.
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Ken 1:10PM (8/04/2006)
Hey #10 & #14, have you heard the latest on Apple's earnings? They may have to go back and re-report it's earnings from as far back a 2000 because of "accounting errors". Kinda blows your argument out of the water doesn't it?
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Oscar 1:39PM (8/04/2006)
Blow it out of the water? Are you sure your name is Ken and not Seinfeld? Dude you're hillarious, they have made billions, regardless of accounting errors. Its true, there are irregularities in their accounting, that is why they are revising their reports.
If you are sugesting that a company that is not trouble free is not successful then you're in denial.
Perfection is not achiavable.
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Sean 3:30PM (8/04/2006)
"...I don't think that these numbers can be extrapolated to fit other SUV manufacturers..."
George Kowalski
George, the numbers on the window sticker are based on the EPA drive cycle. Different driving habits will produce different gas mileage, hence the range of numbers that are given in the fine print of the window sticker.
As far as not being able to beat the numbers with any other SUV manufacturer. My 1999 Land Rover Discovery 1 with 4 inches of lift and 33" mud tires gets better mileage than the window sticker stated it should. I consistantly get 19mpg on the highway and 16 around town. With the modifications I should be getting WORSE mpg not better. Why is is better? Because I dont drive over 55 when I am on the highway (not an expressway) and I dont use the A/C.
Anyone can manipulate the numbers, as far as your 4runner getting that kind of mileage, I am skeptical because my father just purchased a 2006 Tacoma and he is not getting anywhere close to that kind of mileage.
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