Toyota Motor recently reported its first quarterly profit drop in two years due to lower sales and production in Japan and the US. These challenges have slowed Toyota’s previous profit growth.
Toyota was benefiting from its focus on hybrid vehicles, which are cheaper than electric cars. However, issues at its truck and bus unit, Hino Motors, heavy competition from Chinese brands, and a temporary production halt in the US affected sales.
Toyota plans to reduce incentives and boost production in the second half of the fiscal year ending March 2025. Toyota’s Indiana plant, which had partly paused operations, resumed last month. The company aims to reach an annual global production pace of 10 million units.
The automaker adjusted its production goal for this fiscal year, reducing it by 1% to 10.85 million units. Operating profit from July to September was 1.16 trillion yen ($7.55 billion), a 20% drop from last year, but close to analysts’ expectations.
In North America, sales volume and higher labor costs affected profits. In Japan, profit dropped 28% due to lower sales, and in China, intense competition with local brands increased marketing expenses.
Hybrids accounted for more than two-fifths of Toyota and Lexus global sales from July to September, up from last year. After the earnings release, Toyota’s shares rose 1.7%, though this was behind the broader market’s 2.6% rise.
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