Toyota Motor Corporation cars are seen at a briefing on the company’s strategies on battery EVs in Tokyo, Japan December 14, 2021.
Kim Kyung-hoon | Reuters
Toyota Motor Corp on Wednesday said it expects operating profit to climb 10% this business year, with a five-fold jump in pure electric vehicle (EV) sales amid an easing in global supply chain disruption wrought by a chip shortage.
The growth plan was unveiled by new CEO Koji Sato, installed last month, and signals a more aggressive push towards electrification by the Japanese firm which has previously pursued a go-slow approach to all-electric cars, arguing its strategy would provide more consumer choice.
The world’s biggest car maker by sales forecast battery EV sales, including those of its luxury Lexus brand, will reach 202,000 worldwide in the current business year through March 2024 – up more than fivefold from just 38,000 units last year.
Toyota forecast operating profit will rise to 3.0 trillion yen ($22.2 billion) this business year, in line with analysts’ average forecast of 3.02 trillion yen.
That target came operating profit for the fiscal fourth quarter through March surged more than a third to 626.9 billion yen – easily ahead of the average 553.46 billion yen profit estimated by 10 analysts, according to Refinitiv data.
The result was helped by the weak yen boosting the value of overseas sales, and higher output volumes that outweighed the impact of surging materials costs. Reflecting the weak yen impact, revenue for the business year ended March 2023 grew to a record 37.15 trillion yen.
Toyota shares, which were nearly flat just before the release of the earnings, surged immediately after their publication and rose as much as 2.5% before paring gains to close up 0.8%.
The new EV sales target, still a fraction of industry leader Tesla, would boost Toyota’s battery EVs to nearly 2% of total sales volume, up from just 0.4% of its total vehicle sales in the last fiscal year.
“We expect an increase in (overall) sales volume in all regions and production volume of 10.1 million (vehicles), due to such factors as … improvement in semiconductor supply,” Toyota said in a statement. That would represent output growth of 11% versus the previous year.
Seeking to raise its game in the EV sector, where it has been outstripped by new Chinese automakers as well as Tesla, Toyota has said it will introduce 10 new battery-powered vehicles, targeting sales of 1.5 million EVs a year by 2026.
It aims to set up a dedicated unit to focus on next-generation battery EVs, executives on the company’s new leadership team said last month.
Though Toyota has succeeded in retaining its crown as the world’s top-selling automaker, it also faces a raft of challenges going forward.
It’s under pressure in China, the world’s biggest auto market, where a rapid shift to electric vehicles (EVs) has hurt demand for the gasoline-powered cars that drove Toyota’s early successes there. It also must handle problems at affiliate Daihatsu, which rigged safety tests for some Toyota-branded cars.