Toyota raises full-year profit forecast amid shrinking chip shortage

Automaker Toyota on Tuesday raised its full-year net profit forecast to a record high, reporting strong sales in all regions for the first three quarters amid an easing global semiconductor shortage, writes UNN citing The Japan Times.

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As indicated, the weak yen is also helping to boost earnings at the auto giant, which now expects to post a net profit of 4.5 trillion yen ($30 billion) for the year ending March, up from a previous forecast of 3.95 trillion yen.

Net income in the third quarter rose 86% year-on-year to nearly ¥1.36 trillion, the company said.

But scandals involving engine tampering and safety testing at Toyota subsidiaries have forced the company to slightly revise downward its sales target for the fiscal year.

Chief Financial Officer Yoichi Miyazaki said the chip shortage has led to an "accumulation" of orders for cars in early 2023.

"We've been working at a sprint this quarter, so we're not keeping our customers waiting," he told reporters.

"It's true that we have been overwhelmed by the labor shortage affecting our suppliers. We want to rethink our speed to win the long distance race," he added.

Automotive production has recovered significantly from the semiconductor and supply shortages that hit the industry in recent years.

Last week, Toyota announced record sales of 11.2 million vehicles across all its brands in 2023, retaining its title as the world's best-selling automaker.

But testing irregularities at subsidiaries including Daihatsu, which makes minicars, are likely to hit sales in Japan, Miyazaki said.

While vehicle sales in Europe and North America are expected to rise in March, a projected decline in domestic sales has led Toyota to cut its 2023-2024 sales to 9.45 million from 9.60 million.

"If the impact lasts, we expect the number of vehicles to drop even further," Miyazaki added.

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Toyota pioneered hybrid cars with its popular Prius model, and critics say the company has been slow to introduce battery-powered engines, even though demand for low-emission vehicles is growing.

According to official figures released last week, China has overtaken Japan as the world's largest car exporter in 2023, a change driven by the country's dominance in electric vehicle production.

Now Japanese automakers are catching up: Toyota plans to sell 1.5 million electric cars annually by 2026 and 3.5 million by 2030.

The company also hopes to mass-produce solid-state batteries, which charge faster than conventional batteries and give electric vehicles a greater range.

Despite this, Toyota is unlikely to abandon hybrids, according to Bloomberg Intelligence automotive analyst Tatsuo Yoshida.