Toyota’s Chief Accounting Officer, Masahiro Yamamoto assured that Toyota was working to deliver the vehicles as soon as possible
The world’s largest automobile company Toyota‘s struggle with yen volatility, increasing rate of interest within the U.S. market, and disruption in manufacturing because of lockdowns in China (coronavirus) has resulted in the company’s quarterly operating revenue falling 25 percent from last year’s.
As ongoing chip crunch and increasing supply prices outweighed the advantages from the yen’s decline to a 32-year low, Toyota’s fortunes have reversed after record profits last fiscal year through March.
A year earlier, the Japanese automotive manufacturer reported sales with a profit of 749.9 billion yen. Operating profit for the quarter July to September 2022 fell to 562.7 billion yen ($3.79 billion), which is a shortage of an average estimate of 784 billion yen, according to S&P Global Market Intelligence, leading shares to fall as much as 2.6 percent.
In a web-based earnings convention, Toyota’s Chief Accounting Officer, Masahiro Yamamoto, said, “The business environment is changing dramatically, such as the rapid changes of foreign exchange rates, rising interest rates, soaring materials prices, and more.”
Also, he apologized for the inconvenience caused to the customers waiting for their vehicles. He assured the customers that Toyota was working to deliver the vehicles as soon as possible.
Kenta Kon, the Executive Vice-President, stated, “Several changes are co-occurring that could affect the future of the broad automotive industry. It’s hard to look six months ahead.
The executives said that Toyota’s cost-cutting efforts could not offset the sharp rise in raw material prices. Toyota maintained its annual operating revenue prediction of ¥2.4tn for the fiscal year through March; however, since there is a heavy semiconductor shortage, the company lowered its output goal for the year to 9.2mn vehicles from 9.7mn. Moreover, since the carmaker has maintained the objective of producing and manufacturing 3 million automobiles in Japan, it enjoys more significant benefits from the weaker yen than rivals who have shifted more of their manufacturing overseas.
The chip shortage is predicted to stay a bottleneck “for the time being,” stated Kazunari Kumakura, an official of the purchasing department. Also, he added that he had yet to anticipate the interruption to continue for such a long period.
“There will still be some constraints in semiconductors for automobiles as capital investment has not kept pace,” Kumakura mentioned. He continued saying that for tracing elements, in brief, the company has held emergency conferences daily with suppliers for the last two years.
Toyota’s chief communication officer, Jun Nagata, said inflationary pressures have Toyota reviewing its model prices, region by region. But for long-selling models, especially in Japan and the U.S., customers have strong attachments to specific models, which means they also have an impression about appropriate pricing. And so higher costs can’t just be passed on to buyers, he said.
While the company anticipates demand for automobiles to rise within the U.S., Europe, and Japan in the subsequent year as providing constraints are resolved.
“We need to consider how customers will be affected by future interest rate increases as they are probably considering leasing or loans,” Nagata mentioned.