Toyota and Honda Stay Positive on Profits

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Profits per vehicle soar for Toyota and Honda. - Creative Commons

Profits per vehicle soar for Toyota and Honda.

Creative Commons

Toyota Motor and Honda Motor were positive about their full-year profit prospects as tight vehicle supplies caused supply shortages allowed the Japanese automakers to charge more for their vehicles.

The companies also benefit from a weaker yen that raised the yen value of overseas earnings.

Toyota and Honda have cut output because of the ongoing semiconductor chip shortage and competition for the key component from the electronics industry.

Tight supply and lower production helps the companies sell vehicles to customers with fewer financial incentives than they traditionally offer.

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“We are seeing a further 10% reduction in incentives in North America during the second half of the business year after they halved to $1,000 earlier,” said Kohei Takeuchi, Honda’s senior managing executive officer in a news briefing.

Toyota stayed with its full-year profit forecast of 2.8 trillion yen ($24.25 billion), while Honda upgraded operating profit forecast by 21% to 800 billion yen for the year to March 31.

The automakers said supply chain disruptions and chip shortages will continue to affect operations, prompting them to cut costs to increase profit per vehicle.

“We don’t expect the imbalance in chip supplies to resolve quickly and the course of coronavirus pandemic is unclear,” a Toyota official told reporters. “We think that uncertainty will continue into the next business year.”

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Toyota, Japan’s No. 1 automaker, cut its annual production target to 8.5 million vehicles, while Honda kept its 4.2 million target, which is below the 4.85 million it planned for the year.

Refinitiv data shows that Toyota’s 784.4 billion yen operating profit for the three months to Dec. 31 was higher than an average forecast of 716.8 billion.

Honda, Japan’s No. 2 automaker, reported 229 billion yen in operating profit for the quarter, also above an average forecast of 166.2 billion yen based on estimates from nine analysts, Refinitive reported.

Japan’s No. 3 automaker Nissan Motor almost doubled third quarter profit of 52.2 billion yen.

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