Toyota’s Q1 Earnings Doubles, But China’s Challenges Persist

According to a report released by the Japanese carmaker Toyota, the company’s operational profit nearly doubled in the first quarter thanks to higher productivity and sales as well as a favorable impact from the weaker yen.

Toyota reported an operating profit of 1.12 trillion yen ($7.85 billion) for the three months ending in June, up 94% from the same period last year. This figure exceeded the average operating profit projection of 945.22 trillion yen in a Refinitiv poll of 10 analysts.

Related: Toyota to Step Up Hydrogen Fuel Cells Push Outside Japan

The operating profit for the first quarter of last year was 578.66 billion yen. Toyota kept its 3.0 trillion yen profit prediction for the current year unchanged since the circumstances it was facing had not changed much from three months prior.

Globally, the Japanese automaker sold around 2.53 million Toyota and Lexus branded cars in the quarter, up 8.4% from a year earlier, with around 34% of those being hybrids. However China, the world’s largest market remains challenging for Toyota.

Related: Toyota Recalls Over 12,000 bZ3 Electric Sedans in China

Toyota runs the risk of missing out on China’s quick transition to electric vehicles, where the emergence of local rivals and price cuts by Tesla and others are eroding its market share. According to Toyota, the competition in China had become “extremely severe”, while foreign exchange rate fluctuations and its response to price cuts in the world’s largest car market badly hurt its results there. Toyota has stated that in order to increase its competitiveness, it will accelerate the development of EV technology in China and aim for considerable cost reductions.

Source: Reuters

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