Coronavirus to cost Toyota 2 million cars

After having sold, all brands combined, nearly 10.5 million vehicles over the fiscal year ended in March, the Japanese manufacturer fears an 80% contraction in its operating profit over the current year.

For Toyota, the global economic crisis has only just begun. Presenting on Tuesday its results for the fiscal year ended March, the Japanese manufacturer explained that it had overall succeeded in maintaining its turnover as well as its profitability despite the crisis, since January, of the pandemic of Covid-19.


If its sales fell over the first three months of 2020, the group still managed to sell, with all its brands and all its subsidiaries, 10.5 million vehicles over the entire fiscal year. Calculated at 2,443 billion yen ($22.7 billion), its operating profit remains in line with that generated a year earlier.

A difficult year ahead

Anticipating only a slow recovery in the global economy, Toyota expects to experience much more difficult quarters in the course of 2020. While many companies refuse to communicate precise projections as the environment is uncertain, the Japanese group estimates that it will only be able to sell 8.5 million vehicles in the current fiscal year, which marks a fall of 15%. Expressed in “consolidated sales”, this drop represents two million fewer vehicles. “It’s worse than what we experienced with the 2008 financial crisis,” said group CEO Toyoda. “But we should still be able to make a profit over the year,” he insisted.

Its accounting team estimates that a resumption of sales late in the summer will allow it to maintain an operating profit of 500 billion yen ($4.7 billion) over the fiscal year ending in March 2021. , which represents an 80% contraction over one year.

China reignites

In recent weeks, the group has witnessed, with relief, a rekindling of the Chinese market, which had been the first to be frozen by the Covid-19 crisis. In April, its sales in China were even slightly higher than those recorded in April 2019. And this despite a very late recovery of its various factories in the country. Pressed to return to a form of normalcy, Toyota also restarted its production in the United States and Canada on Monday, but still to a limited extent.

Convinced that his group will succeed in avoiding falling into the red, Akio Toyoda explained that this resilience was linked to the transformation efforts started since the crisis of 2008. Promising then to stop the race for volumes, the CEO, who is also the grandson of the founder of the company, worked a lot on a recovery of the operating margin of the company and on the flexibility of its production capacities in order to develop an entity capable of withstanding external shocks. He believes that the current crisis will be the occasion for other transformations. “This will inevitably accelerate the new needs in terms of mobility,” he assured, before promising the launch of innovative services to respond to this evolution of society.

Author: Nabeel K
Email: nabeel@wheelsjoint.com



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