icon-branding Events Icon Created with Sketch. Inventory Icon Created with Sketch. icon-mail-hovericon-mail Marketing Icon Created with Sketch. icon-operationsicon-phone-hovericon-phone Product Training Icon Created with Sketch. Sales Icon Created with Sketch. Service Icon Created with Sketch. icon-social-fb-hovericon-social-fbicon-social-google-hovericon-social-googleicon-social-linkedin-hovericon-social-linkedinicon-social-rss-hovericon-social-rss icon-social-twitter Created with Sketch. icon-social-twitter-hovericon-social-twittericon-social-youtube-hovericon-social-youtube

Commentary & Voices

Toyota: Solid Results Come with a Warning

Share

Facebook Share Tweet Linkedin Share Email Email

Article Highlights

  1. Toyota reported higher earnings, beating analysts’ forecasts, for April-June, Q1 in Toyota’s fiscal year that ends March 31, 2020.
  2. Net income was up at $6.2 billion on higher revenue of $69.5 billion.
  3. In line with market trends, Toyota and Lexus sales were driven by higher SUV and truck sales.

Toyota reported higher earnings, beating analysts’ forecasts, for the April-June quarter, Q1 in Toyota’s fiscal year that ends March 31, 2020. [The April-June quarter is referenced as Q2 in charts below.]

Net income was up at $6.2 billion on higher revenue of $69.5 billion. Global vehicle sales rose to more than 2.3 million vehicles. Sales were up in Japan, other parts of Asia and Europe. However, Toyota sales in North America dropped.

As a result, Toyota lowered its annual profit forecast on softer U.S. sales, global uncertainties and a strengthening yen, which makes exports from Japan more expensive and weighs down earnings.

In the U.S., Toyota saw quarterly sales drop 2% to 606,989 vehicles, its lowest level quarterly sales since at least 2014, while the total market dipped 1%, according to Cox Automotive. Toyota brand sales slipped 1.5%; Lexus sales fell 2.6%. Toyota and Lexus share held steady at a combined 13.7%

In line with market trends, Toyota and Lexus sales were driven by higher SUV and truck sales. RAV4, now Toyota’s best-selling model, saw sales climb 9% to 116,790 units. Camry, once Toyota’s volume leader and still America’s best-selling car, held its own, with sales up 7% to nearly 95,000 units. Corolla sales plummeted 15% in the quarter. Toyota announced in July that it would not build the Corolla at its new joint-venture plant with Mazda in Alabama as originally planned and, instead, would produce a utility vehicle. Hybrid Prius sales plunged 28%. Sales of the smaller Tacoma pickup truck rose a scant 2% as it faces increased competition with vehicles like the Ford Ranger.Overall, Toyota’s average transaction prices (ATPs) edged 2% higher in the quarter to $33,318 per vehicle, according to Kelley Blue Book. Toyota brand ATPs rose 3% to $31,322, while Lexus ATPs dropped about the same to $48,901, Kelley Blue Book data shows.Lexus jacked up incentives significantly – 28% – in the last quarter alone to an unprecedented (for Lexus) $5,243 per vehicle, according to Kelley Blue Book. Lexus incentives have been on the rise over the years, from under $3,000 in 2015 to over $5,000 in 2019. Toyota incentives edged downward by 2% to just shy of $2,000 per vehicle, according to Kelley Blue Book data.

Tariffs: Our Insights

The Cox Automotive Economic and Industry Insights team is closely monitoring tariff developments and regularly publishing insightful commentary and analysis as appropriate.

READ THE LATEST

Sign up here to receive bi-weekly updates on news and trends dominating the automotive industry.