Autoblog

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]

The current economic environment in the United States is hurting all auto makers these days, even mighty Toyota, which was once considered immune to so-called market realities. Though its overall performance last year would be considered a stellar achievement for any other automaker, Toyota's 28% profit plunge in the fourth quarter of 2007 points to an expected 27% drop in annual profits in 2008. If Toyota's revised forecast proves accurate, 2008 would break a nine-year stretch of profit growth. In addition to the slowing U.S. market, Toyota also cites high material prices, the worldwide credit crunch and a strong yen as contributing factors in its mild downturn.

Toyota's expected profit drop is certainly newsworthy, but we just have to wonder how the money-losing American car companies will cope in the U.S. market with the same issues. While sales of cars are gaining strength, the SUV and truck markets are sinking with what could be Titanic-like implications for the truck-heavy lines from Ford, Chrysler and GM.

[Source: Toyota]

Whenever we talk about GM's performance in the global market, people invariably want to hear about how well Toyota is doing in the same arena. The Japanese automaker has been nipping at the General's heels in terms of the number of units each automaker has sold globally so far this year. Earlier in the year, Toyota actually surpassed GM in global sales, but the American auto giant has since regained the lead in year-to-date global sales and keeps it through Q3.

On a global scale, Toyota performed quite well in its own fiscal second quarter, which is the same period as the calendar year third quarter for most companies. During this period, Toyota earned its second highest ever operating profit of $5.01 billion, but its North American figures were hurt by a few factors, chief among them being incentives required to increase sales of its Tundra full-size pickup. Higher raw material costs and, of course, the subprime market meltdown are also contributing factors.

Regardless, Toyota isn't budging on how many vehicles it expects to sell worldwide during its fiscal year that ends March 31, 2008. In fact, it's raised its target to 8.93 million units, up some 40,000 units from previous estimates. Seems that despite recent bumps in the road concerning quality concerns over the car and trucks it sells in the U.S., Toyota's juggernaut keeps on steaming ahead.

[Source: Automotive News, sub. req'd]

Toyota Motor is scheduled to release its earnings report later this week, and the Japanese media is reporting that it will be awe-inspiring. Second quarter operating profits will be up 23 percent, to $4.3 billion, with sales up 10 percent to $48 billion.

Recalls and sexual harassment lawsuits aside, the company looks set to post stellar results for the year ending in March 2007, with profits forecast to be north of $17.4 billion.

[Source: BusinessWeek, Reuters]