Amid the global shortage of semiconductors, despite pandemic-related production downtimes in Southeast Asia and despite rising material costs, Japanese automaker Toyota Motor has raised its profit forecast for the fiscal year ending in March to 2,490 billion yen (18.9 billion euros).

That corresponds roughly to an increase of 11 percent compared to the previous year.

Most recently, the profit was so high in the 2017/18 financial year.

Patrick Welter

Correspondent for business and politics in Japan, based in Tokyo.

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In the July through September quarter, Toyota increased its surplus to 626 billion yen, 33 percent more than a year ago.

On the Tokyo stock exchange, the share price of Toyota closed with a plus of 0.7 percent.

The forecast reflects Toyota's confidence that the tense supply situation will ease in the coming months.

Toyota insisted on at least partially making up for previous failures by aggressively expanding production.

The company is now forecasting production of 9 million vehicles for the Toyota and Lexus brands, 300,000 fewer than previously expected.

This forecast is now a little conservative, CFO Kento Kon told journalists.

The devaluation of the yen is helping

The global market leader warned against too much confidence. Risks remained, Kon explained. He stressed that the improved forecast was largely due to the depreciation of the Japanese yen against the US dollar. "Without the devaluation of the yen, it would essentially be a downward revision as a result of rising material costs," said Kon. He emphasized that Toyota could not pass on the higher material costs in competition to customers.

In the Covid pandemic, Toyota was affected by the shortage of computer chips later than many other competitors because the company was able to fall back on risk-oriented stocks. But from mid-August onwards, Toyota also felt the shortages clearly. Above all, it became noticeable that plants in countries such as Malaysia and Vietnam had to close because the government implemented well-designed anti-Covid measures. This meant that there was not only a lack of semiconductors, but also of accessories such as cable harnesses.

In September, Toyota produced around 40 percent fewer cars than a year ago as a result of the shortage of parts.

A similar minus is expected for October.

For November the company expects a production of 850,000 to 900,000 pieces.

That would still be less than originally planned, but an increase of around 300,000 units compared to the same month last year.

Sales are still not reaching pre-pandemic levels

In the second quarter of the fiscal year, sales rose 11 percent to 7.55 trillion yen. The operating profit was 750 billion yen 48 percent higher than a year ago.


The good financial development in the second quarter was due to the fact that, despite the limited production, Toyota was able to keep global sales almost at the previous year's level. In the first half of the fiscal year, from March to September, Toyota sold 5.3 million cars, 900,000 more than last year, but still nearly 200,000 fewer than the year before the pandemic.

Given the scarce supply, the great demand for new cars also means that the prices for used vehicles are rising.

Toyota is not the only one benefiting from the fact that it has to offer fewer discounts.

Kon also cited this as one reason the good second quarter results were too positive in certain respects to Toyota's fundamental strength.

For the fiscal year ending March 2022, Toyota expects 10.29 million cars to be sold.

Sales are expected to reach 30 trillion yen (227 billion euros) and operating profit 2.8 trillion yen.

Toyota estimates the surplus at 2.49 trillion yen (18.9 billion euros).