Toyota's Q1 profit drops 39%
Toyota is not used to seeing its profit margins drop, as the Japanese auto giant has enjoyed increased profit for nine straight years. Expect that run to end this year, though, as Toyota is discovering that it is not immune to the downturn of the American auto market. For the year, Toyota has revised its sales forecast from 9.06 million units to an estimated 8.74 million. For the first quarter of the year that ended in June, Toyota has also announced that its operating profit took a 39% plunge from lower sales in both the United States and Europe, the increased value of the Yen and higher cost of raw materials. Oh, and then there's the pesky problems of leases. Still, Toyota sales remain fairly strong in this sinking market and a profit is a profit. We'd imagine that this is a problem any one of the Detroit 3 would love to have on its hands.[Source: Automotive News - sub. req'd]
Reader Comments (Page 1 of 3)
hashiryu 7:09PM (8/07/2008)
39% !!!!!!?!?!?!
Damn! Thats a lot.
Reply
AMcA 11:41PM (8/07/2008)
Toyota's the next GM. It's going to take years, decades, maybe, but it's going to wind up where GM is today.
icu812ru469 7:32AM (8/08/2008)
And how do you figure this? GM was making s**t cars that didn't up a lick even close to 100K and they did this for over a decade. Toyota quality has dropped, but not even close to the extent that big 3 were dropping. Also, Toyota is just feeling the effects of downturn of the industry, just like EVERYONE else. GM was seeing loses as others were growing. You only wish this was the start of GM for Toyota. GM will be gone long before Toyota will be gone.
John 8:58AM (8/09/2008)
So Autoblog, where is the picture of rust all over the Toyota badge?
FSM 7:14PM (8/07/2008)
Not to mention that the drop in sales is related to Toyotas inability to keep their smaller cars in stock. I swear the Priuses (or is it Prii?) and Yarises (or is it Yarii?) are impossible to find in my neck of the woods. I have been driving through 3 seperate Toyota dealerships hoping to test drive a Yaris but to no avail. It have been looking since May. I think once they step up production to meet demand Toyota will be the Juggernaut again.
Reply
rypt 7:30PM (8/07/2008)
Can't your local dealership get a Yaris sent over to them from some of the other dealerships near-by? I dunno how the system works in USA, but I've had both car and bike dealers sort that out for me in UK here.
stratojet 7:35PM (8/07/2008)
To say that the profit fell 39% has nothing to do with the suppositly lack of Yaris or Prius. Profit = sales-cost. So in essence, Toyota has been hit with higher cost, resale value not quite on target compared to the residuals they have forecasted, huge decline in truck sales. Let's not forget that they do have their share of trucks:
4Runners
FJ cruiser
Sequoia
Highlander
Lexus LX,GX,RX
Tundra
Tacoma
They also suffer in the high end
Lexus -25% sales in July
-21% June
-17% May
Same story since the beginning of this year. So, in essence, lack of revenues from the higher end is a major factor.
Sir, I suggest you revisit accounting 101.
why not the LS2LS7? 7:50PM (8/07/2008)
GM also reports their smallest cars are flying off the lots and they are running 3 shifts of Cobalts.
jordan 7:58PM (8/07/2008)
Remember the report about used Priuses' costing more than new? Hooray supply/demand :)
Randy 1:27AM (8/08/2008)
Looks like Ford's going to pull out of this? Think about this! Ford is about to launch multiple small cars into the market! Under three different name plates. Ford, Mercury (most of them) and Mazda (what is it the Mazda 2?). Take into consideration that Ford is going to go balls to the wall forward with this plan and that Toyota has been relying on small car sales, blend the new cars to the market, the high quality of the current Ford linup, the actual value of the UAW deals coming to fruition in a year and a half and you've got a come back with guns slinging!
I read today that Ford is actually bigger than GM in revenue now too! BUY STOCK :)
AngeloD 7:15PM (8/07/2008)
It looks like Toyota's decision in the early 2000's to concentrate on gas-guzzling Trucks and SUVs like the Tundra-Sequoia is coming back to bite them.
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bluestate 10:12AM (8/08/2008)
Huh? Everyone focused on trucks/SUVs in the early 2000's. The reason we're talking about Toyota's PROFITs is because they've always been committed to the small car market.
DesiAuto 7:26PM (8/07/2008)
If Toyota's Q1 profit drops 39% ... than God only help Big 3.
--
BTW, it's a drop IN the PROFIT, they are STILL profitable itself is an achievement.
And as someone said, part of the drop is because they cannot make enough yaris, prius and corrollas.
Reply
Hugh G 7:30PM (8/07/2008)
The only car that keeps on selling is the MINI. That thing is like the energizer bunny. It keeps selling, and selling, and selling....
Reply
Franz 7:35PM (8/07/2008)
The Mini seems to hit all the right buttons in today's market. It's relatively cheap, pretty frugal, looks good, drives well and the build quality is top notch.
why not the LS2LS7? 7:52PM (8/07/2008)
True, although BMW reported that MINI sales have been cutoff until the end of the product year now. So, by the same argument that Toyota lost money because they didn't have cars to sell, BMW MINI will be hurt too.
I went by the local BMW MINI dealer today, and they had a ton of cars on the lot. I was rather surprised. The Sm@rt dealer also has a lot of cars on the lost for a company that swears that you need to get on a backorder list to get one.
Hike15 10:47PM (8/07/2008)
yeah
mini proved that a small fun to drive high quality hatchback will sell well here
i hope the big 3 are taking notes
mk 7:44PM (8/07/2008)
Hard market for everyone.
dollar falling makes it harder to afford new items. suprise, suprise.
Reply
stratojet 7:37PM (8/07/2008)
To say that the profit fell 39% has nothing to do with the suppositly lack of Yaris or Prius. Profit = sales-cost. So in essence, Toyota has
been hit with higher cost, resale value not quite on target compared to the residuals they have forecasted, huge decline in truck sales.
Let's not forget that they do have their share of trucks:
4Runners
FJ cruiser
Sequoia
Highlander
Lexus LX,GX,RX
Tundra
Tacoma
They also suffer in the high end
Lexus -25% sales in July
-21% June
-17% May
Same story since the beginning of this year. So, in essence, lack of revenues from the higher end is a major factor.
Sir, I suggest you revisit accounting 101.
Reply
why not the LS2LS7? 8:37PM (8/07/2008)
If you double your sales, you double your profit. So reduced sales will generally lead to reduced profit.
Reduced sales won't lead to reduced gross profit margins (profits divided by sales). However, given fixed overhead, it will lead to reduced net profit margins.
Executive summary:
It's very likely an ability to make enough products could lead to reduced profits.