Toyota only sold roughly 2 million cars during the quarter, compared to 2.1 million during the same time last year
A Double Digit Decrease of Profit for the April-June Quarter
Toyota said that its earnings for the months of April to June decreased 18% from the same period last year as a result of rising material prices and a decline in sales brought on by supply-chain issues. From ¥898 billion a year earlier, the net profit for the quarter decreased to ¥737 billion, or $5.5 billion, according to a news story by The Wall Street Journal.
The rising cost of materials, which Toyota claimed was brought on by higher prices its suppliers were having to pay for things like gasoline, transportation, and other things, was cited as the main factor in the decline in operating profit. It claimed that rising material costs caused a ¥315 billion ($2.35 billion) decrease in operating profit during the quarter.
Toyota said, according to The Wall Street Journal, the growing raw material costs would be offset by a strengthening dollar and euro, allowing the business to maintain its operating profit prediction of ¥2.4 trillion ($17.9 billion). Japanese automakers see an increase in profits when the yen, their country’s currency, weakens.
Asia Financial noted that due to chip shortages and the effects of COVID lockdowns in China, the Japanese automaker reduced its monthly production targets three times during the first quarter of April through June, falling 10% behind its original goals.
Toyota, like other car manufacturers, is struggling with rising prices and worries that global inflation may slow consumer demand.
Following shortages that resulted in industry-wide production interruption, Toyota said that its semiconductor supply has been increasing. However, production disruptions were still a possibility, the car manufacturer said.
Toyota only sold roughly 2 million cars during the quarter, compared to 2.1 million during the same time last year. However, it did not alter its forecast for total fiscal year production of 9.7 million vehicles, stating that it will increase in the coming months, according to ABC News.
Toyota achieved record profits in the most recent fiscal year, raking in a ¥2.85 trillion ($21 billion) profit, up roughly 27% year on year. It projects a ¥2.36 trillion ($17.6 billion) profit for the fiscal year ending in March 2023. An earlier estimate of ¥2.26 trillion ($16.9 billion) was revised higher for this projection.
Car manufacturers are confident that demand will be sufficient despite concerns of an U.S. economic downturn because of increased pricing and a backlog of orders brought on by a prolonged shortage of vehicles, as per The Wall Street Journal.
Toyota Apologizes for the Backlog of Orders
Customers who have been waiting for their cars after placing orders received an apology from Toyota executives. Some people waited for so long that the vehicle underwent a model change during that period, ABC News reported.
According to the manufacturer, a number of issues in addition to the chip scarcity have hampered manufacturing, including flooding in South Africa and pandemic lockdowns in Shanghai.