Chip crisis reaches Toyota – world’s largest carmaker lowers sales forecast

Electric car CH-R from Toyota

When it comes to electric mobility, the carmaker, which has long relied on its strong position in hybrid cars, is lagging behind most of its rivals.

(Photo: Reuters)

Tokyo The world’s largest car manufacturer Toyota is also caught up in the chip crisis. While sales rose sharply in the second fiscal quarter due to the falling yen, operating profit fell by a quarter to 562.7 billion yen, the equivalent of 3.8 billion euros. This was announced by the world’s largest carmaker on Tuesday. The group missed the expectations of analysts, who had expected a small increase in profits.

Toyota cut its production forecast for the fiscal year that started in April by 500,000 vehicles to 9.2 million cars. That would still be a record though. The company left the profit forecast for the full year at 2.4 trillion yen.

During the corona pandemic, Toyota managed the parts shortage better than its competitors in Europe and the USA. Manufacturers like Volkswagen, on the other hand, sold far fewer cars than before the corona pandemic. Now it turns out that Toyota is not completely immune to the development either.

Chip crisis is not the only problem for Toyota

According to Kazunari Kumakura, the automaker’s chief buyer, the peak of the chip crisis is over. In talks with suppliers, however, it was found that the original target of 9.7 million cars would be difficult to achieve. Because of the uncertain geopolitical situation and possible corona lockdowns in China, Toyota is therefore lowering its production target so significantly.

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However, the chip crisis is not the only problem that concerns Toyota, said CFO Kenta Kon. “In the past six months, several major changes have occurred simultaneously.” Commodity prices have risen, chips remain scarce, corona lockdowns are hitting the Chinese market, and the Russia business, which Toyota closed after the attack on Ukraine, had to be written off.

At the same time, the yen has depreciated by around a third against the dollar since the beginning of the year. On the one hand, this is expressed positively in the balance sheet. Sales rose to 17.7 trillion yen in the first half of the year, as revenue in other markets is now increasing due to exchange rate effects. Toyota therefore increased its sales forecast for the full year by 4.3 percent to 36 trillion yen.

17.7

trillion yen

Toyota achieved sales equivalent to 121 billion euros in the first half of its fiscal year.

But profitability declined. The fall of the yen and other currencies against the dollar increases already high purchasing costs. Because the profit forecast remains the same with increasing sales, the carmaker only expects a return on sales of 6.7 instead of seven percent for 2022. In the last fiscal year it was still 9.5 percent.

However, forecasts are not very reliable for CFO Kon in the current situation. “It’s difficult in the auto industry right now to look six months ahead, let alone Toyota’s balance sheet,” he said.

Automaker is keeping a low profile on the electric strategy

However, the managers hardly addressed one problem at the press conference on Tuesday: Toyota’s electric car strategy. The group announced in December that by 2030 around a third of all cars should be battery-electric.

But currently the automaker, which has long relied on its strong position in hybrid cars, is lagging behind most of its rivals. The group had to recall the first all-electric model bZ4X shortly after the start of sales because of a completely analogous problem: because of wheels that might come loose while driving.

Toyota is now launching a second model in China. But that’s mostly from local electric car giant BYD. Reuters news agency even reported this month that a task force at Toyota is reviewing all electric car plans to better compete with manufacturers like Tesla. But Toyota’s top managers were silent on this. You stick to the strategy, it was only said.

More: “Ecologically very critical” – Many electric cars are overpowered and expensive.

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