Toyota’s Quarterly Profit Rises 60%
Toyota Motor Corp., its worldwide momentum boosted by a strong performance from its Torrance-based U.S. sales operation, reported a 60% gain in its third-quarter earnings Thursday.
In the United States, which accounts for 30% of Toyota’s global sales and is its largest market, the company has been gaining ground on its rivals for decades and is the bestselling foreign brand, with an 11.3% share of the market.
It enjoyed particularly strong U.S. sales in the last three months of 2003 with the introduction of a redesigned Sienna minivan and a four-door “double cab” version of its Tundra pickup. Popularity of the RX 330 sport utility sold by the company’s Lexus luxury brand also boosted sales.
The U.S. gains helped Toyota’s net income soar to $2.72 billion in the three months ended Dec. 31. Third-quarter sales were up 8% from a year earlier at $41.6 billion.
The company said the falling value of the dollar shaved almost $760 million from its earnings. The dollar dropped almost 10% against the yen in the last year, eroding the value of Japanese firms’ overseas profits.
Toyota escapes some of the pain caused by a stronger yen because it makes about two-thirds of the cars and trucks it sells in North America at four assembly plants in the U.S. and Canada. Those vehicles use North American parts, paid for in dollars, for about 75% of their content, reducing Toyota’s exposure to currency fluctuations.
Toyota is building its first Mexican plant in Tijuana and a fourth U.S. plant in San Antonio.
Toyota Motor Sales USA expects sales to grow by 6.5% this year to almost 2 million cars and trucks, up from 1.87 million last year, said Don Esmond, vice president and general manager of the company’s Toyota division.
The company posted a 6.3% U.S. sales gain last year, and Esmond said the strong showing would enable Toyota to reduce its sales incentives considerably this year. Incentives have been creeping up over the last six months, reaching about $2,000 per vehicle in December.
“We feel pretty good about our contributions” to the company’s third quarter, Esmond said. “And we had a pretty good January too.” Toyota kicked off its fiscal fourth quarter in the U.S. with a January sales increase of 16% over January 2003.
Globally, Toyota said it expected to sell 6.7 million vehicles in its current fiscal year, which ends March 31, up 9% from 6.1 million in the previous year. That would include 2.2 million in North America, up from 2.1 million a year earlier. Toyota also raised its fiscal year profit forecast for its parent company.
Toyota passed Ford Motor Co. last year to become the No. 2 carmaker worldwide in terms of retail sales. Toyota remains No. 3 in wholesale sales, with wholesale volume of 6.5 million cars and trucks in calendar 2003, falling short of Ford by about 230,000 units.
Toyota’s U.S.-traded shares Thursday gained $2.88 to $67.53 on the New York Stock Exchange.
