What Recalls? Toyota Earnings Quadruple in Second Quarter

×
Toyota's second quarter profit more than quadrupled on a sales recovery despite lingering worries about the quality of its cars, especially in the key U.S. market, after massive recalls.

Toyota reported July-September profit of 98.7 billion yen ($1.2 billion) on Friday, up dramatically from 21.8 billion yen profit a year earlier but lower than analysts expected. Quarterly sales rose 5.8 percent to 4.807 trillion yen ($59.5 billion).

Toyota Motor Corp. is the only major automaker whose U.S. sales have been sluggish despite a recent onslaught of incentives that have boosted other automakers' results - underlining how its once sterling image continues to be tarnished in that crucial market.

Like other Japanese exporters, Toyota is also fighting damage from a strong yen that erodes the value of overseas earnings.

The world's top automaker by vehicle sales raised its profit forecast for the year through March 2011, albeit modestly, to 350 billion yen ($4.3 billion) from an earlier forecast for 340 billion yen ($4.2 billion) profit.

That would mark a 67 percent rebound from the previous year, when the maker of the Prius hybrid and the Camry sedan was hit hard by the recall woes. But that's a shadow of what it used to rake in during its heyday.

Toyota raised its global vehicle sales forecast for the full year to 7.41 million vehicles from 7.38 million. That would be a 2.4 percent gain from 7.24 million vehicles sold the previous year.

Toyota said it was more upbeat about sales in Japan, the rest of Asia and Europe, but lowered its forecast for North American sales by 80,000 vehicles. "We continue to suffer a strong backlash from the repercussions," said Executive Vice President Satoshi Ozawa of the quality problems. "The situation may be tough for us, but we will try to sell one car at a time."

Over the past year, Toyota has recalled more than 11 million vehicles around the world for a range of problems, including faulty gas pedals, floor mats that can trap accelerators, defective braking and stalling engines.

Just Thursday, Toyota recalled 135,000 compact cars in Japan and Europe for a software problem that could cause power steering to stop working.

Koji Endo, an auto analyst with Advanced Research Japan Co., thinks more time is needed before Toyota can patch up its image because "the Toyota Way," reputed for quality and long the foundation of the automaker's growth, has been debunked. "We can't see any overall vision or a model for its business that points the direction in a big way about where Toyota is going," he said. "We are not going to see a powerful Toyota for a long time yet."

Toyota's results follow even stronger earnings recoveries from other Japanese automakers including Honda Motor Co. and Nissan Motor Co.

Like Toyota, both had booming sales in China and other emerging markets despite the strong yen.

Toyota said it had calculated the dollar trading at an average of 86 yen for the latest quarter, while it had been at 94 yen last year. In recent months, the dollar has tumbled to about 80 yen.

Where Toyota differs is the serious damage to its reputation in the U.S. because of the recalls and a perception that it was slow or reluctant to come forward with problems.

Toyota faces hundreds of lawsuits in the U.S., many from families of people who died or were injured in accidents related to unintended acceleration suspected of being linked to the quality lapses.

Jesse Toprak, Vice President of Industry Trends and Insight at TrueCar.com, said Toyota lost market share in the U.S. despite hefty incentives.

"Toyota has not recovered from the recalls," he said. "Until we stop hearing news about another recall, consumers are not going to gain confidence in the brand - if they haven't already left."

One bright spot in Toyota's performance is the popularity of the Prius in Japan, where it was the best-selling model for the 18th straight month for October, even after green car subsidies ended.

For the fiscal first half, Toyota's profit totaled 289 billion yen ($3.6 billion), a reversal from the loss of 56 billion yen a year earlier. First half sales climbed 15.5 percent to 9.68 trillion yen.

Toyota stock finished 2,964 yen, up 1.9 percent. Earnings were announced after trading ended.

Shino Yuasa in Tokyo and Tom Krisher in Detroit contributed to this report.

Increase your money and finance knowledge from home

Investing in Startups

The lucrative and risky world of startups.

View Course »

Investing in Emerging Markets

Learn to invest in a globalized world.

View Course »

Add a Comment

*0 / 3000 Character Maximum

15 Comments

Filter by:
cqdeed

The vehicles I have owned are varied and the length of time I owned them tells me a lot....1959 used Ford-3yrs-sold, 1968 used Opel-2yrs-blown engine, 1967 used Ford-4yrs-sold, 1970 used Plymouth-3yrs-sold, 1977 new Pontiac-8mos-crashed, 1978 new Pontiac-5yrs-sold, 1978 new Ford-4yrs-sold, 1980 new Plymouth-5yrs-destroyed at curb, 1983 used Ford-1yr-sold, 1989 new Mitsubishi-3yrs-sold, 1990 new Toyota-20yrs-sold. I just bought a 2010 new Toyota.

November 05 2010 at 10:51 PM Report abuse rate up rate down Reply
George

GM junk needs to go out of business. We consumers willl put them out of business. The absolute crap that comes out of GM factories made by stupid uaw people, needs to go away forever. i could care less about the jobs that would be gone, cause Chrysler and Ford kick the crap out of GM JUNK.

November 05 2010 at 10:10 PM Report abuse rate up rate down Reply
Go Wings!

They need the profit cause they are about to get the crap sued out of them, I am an American thru and Thru I will not purchase this Jap crap only a fool would still purchase this crap! Toyota is covering it all up and the proof is the fact that they and they alone are the only ones who can read their "black boxes" So even if it did show an error code they will say there was none!

November 05 2010 at 9:56 PM Report abuse -1 rate up rate down Reply
tgen121

The bottom line here is that the Japanese (Toyota, Honda and Nissan)have delivered a quality low maintenance auto that go the distance (200 K plus) for the 1980 and 1990 model years. The American automakers built disposable cars that blew up before they hit the 100K mark. So the Japanese have built consumer confidence in their vehicles for almost 30 years now. No surprise here that Toyota is still doing well. I have driven Fords and Chevys and the 60 and 70 model years were great. My 95 Ford Windstar had total engine failure at 65 K my 87 Chevy celebrity wagon met the same fate at the 80 k mark. My 2000 Honda is at 155 k and still riding like brand new, my 1999 Nissan is still moving along with 158 K and now almost all these models sold in the US are built in the US. Hopefully the US automakers have woken up with the 2000 model years and they will deliver a comparable product and build consumer confidence again.

November 05 2010 at 8:55 PM Report abuse +1 rate up rate down Reply
LifeGuard

That Toyota should post a profit is not news. Toyota has a superior product, even with the recent glitches. They sell cars worldwide. Wouldn't it be nice if we Americans could compete with the rest of the world? As it is, we buy from others, and rightly so--they can manufacture things at a cheaper cost and pass the savings on to us (better than any tax break we could ever get). The problem becomes one of over-spending--when we owe other countries more money than they owe us. Eventually we either have to pay them back by raising money from the sale of bonds, or we're going to have to start the presses--which will cause big-time inflation in this country. In either case, Toyota gets to sell cars--and we will pay.

November 05 2010 at 8:18 PM Report abuse +1 rate up rate down Reply
whitecloudbia

You know I made some fun of Toyota when they first had their recall just like we did when some American cars had their problems from their development to their mass production at their plants. Since then even though my first car was an old Chevy from GM which some gal said I could have if I paid the impound fee at the old Long Beach police tow yard and fixed the starter the reason it got towed in the first place. Since I was in Auto shop at high school I took the job. Well I all so was in the football team as well where instead of summer practice I took driver ED instead and I'll never the look of old Troy Winslow's face when I saw him the next year as I used to like to lift all the weights on the training machine 10 times for every ten pounds and even though I wasn't very good at reading the plays I played hell running up the middle to sack the other teams quater back. My first real car was an old FORD Mustang which I kept in good running order as with my old chevy while I was working on the timming reaching for the number one wire which fell off from my timming light when a friend pat me on my shoulder asking what I was doing when I turned my head my hand got caught on the generator belt and I all most lost my finger. Thank you St. Mary's for sewing it back on. Talking about sewing ( as it's easier for a camel to thread a needle than for a rich man to get to heaven ), I would like to thank a certain Japanese doctor Mr. Imogowa at UCI Medical Center for his TIPS buying me a little more time to go and re-kindle my interest in medicine with my country when I once served as a band aid man medic " Domo Arigato ! " Since in the news with the recent incident where a Japanese Coast Guard ship was rammed by a Chinese fishing boat maybe we should remember how it feels when someone attacks a peacefull navy while in it's home port and not the piracy of the high seas like in Somalia before one goes to blows as we remember the Arizona, Pueblo, and the recent incidents in Japan and North and South Korea while we reach for the heavens and the stars in space like the Federation of Planets from the old Star Trek where Chekov would allway's say " Yes Captain in was invented in Russia first," as they talked of technological wonder's. As I like to watch television I have been watching the various other news media's like NHK where I all so rekindled my interests in the old honorable Japan and it's founding martial arts teacher Master Funikoshi, of the Shotokan karate which I once studied from an old book given to me from a friend to build my inner strength and over the obsticles of pain like I am currently now going through with my several medical problems which I have incurred in this current war as well. So in the James Bond movie " You Only Live Twice," where a Japanese man of government was named " Tiger," I would like to give that same nick name to Doctor Imogowa," along with the ' Rocky,' Sylvestor Stalone movie song " Eye of the Tiger," from the old Horses Mouth rising up from the dead ? Oh and for China Confusious say " Grass Hopper who go to Bankok, should of instead went to Banger Her, Maine ? " The world tomarrow today ?

November 05 2010 at 6:01 PM Report abuse rate up rate down Reply
Randy

Just goes to show how stupid people are to be buying these runaway pieces of junk. They deserve what they get.

November 05 2010 at 5:10 PM Report abuse -2 rate up rate down Reply
ddan8719

Had these recalls affected an american producer,they would have to close there doors.With at last count 68 deaths due to sudden acelleration it would have spelled doom for any american company..But in the asian car game with each death came a boost in sales..with each recall came a boost in sales..and with america there number one market there sales continue to increase..moronic educated idiots..buy far there largest loyal customer base..make that liberal moronic idiots..who contnue to send there money to the shinning asian shores....Usa today data.. 79% of all foreign sales are made buy liberal buyers..approx 21 months ago..

November 05 2010 at 4:35 PM Report abuse -1 rate up rate down Reply
SandyBetty

Not only did Toyota have daily recalls of major safety parts, but they hid them from the public. People were killed. I would never trust Toyota. And, Toyota and ALL of the car companies have been trying to kill a pro-motoring consumer bill in Congress called The Motor Vehicle Owners' Right to Repair Act (Right to Repair Act) HR 2057 and S. 3181. It allows motorists to choose where they have their cars and trucks repaired and by whom. Because of the cars' computers, vehicles must go back to the new car dealerships instead of the independents, even when recently out of warranty. If the correct dealership is closed or not near, the person has to drive on defective parts. If you want to choose where you have your cars repaired, log onto: www.righttorepair.org and Sign the Petition twice. Once for your congressman and then for your Senators. All you have to do is plug in your zips. Pass Right to Repair. It's YOUR life, YOUR money and should be your choice. www.righttorepair.org

November 05 2010 at 4:18 PM Report abuse -2 rate up rate down Reply
handy1manw

ford deisels are junk at 100,000 mi. ask any HONEST dealer

November 05 2010 at 4:04 PM Report abuse rate up rate down Reply