Toyota is capitalizing on a U.S. hybrid boom as electric vehicle demand slows, driven by rising gasoline prices. The Japanese automaker reported a 15 percent increase in operating profit to $24.7 billion for the year through March. Toyota's shares surged more than 16 percent in Tokyo, marking the company's biggest daily gain in nearly 40 years.
Strong third quarter results showed U.S. hybrid sales rose 28 percent, while electric vehicle sales declined 40 percent following the elimination of federal tax credits. Inventories of hybrid vehicles are described as "extremely tight," selling quickly without discounts. Toyota sold 2.36 million hybrids between April and September, an 8 percent increase from the prior year.
Profitability has been bolstered by the weak yen, which inflates the value of overseas earnings. This success contrasts with rivals like Honda, which posted its first annual net loss in seven decades in May due to electric vehicle strategy challenges. Toyota's sales in China fell by a quarter, reaching their lowest level in nearly a decade, as Chinese automakers flood global markets with inexpensive electric cars.
With Democrats regaining control of Congress, a renewed legislative push for pro-EV policies is likely, though experts warn Toyota's current earnings may be short-term as the industry faces increasing competition in battery electric vehicles.
Source: New York Times Business · Summarized by HeadlinesBriefing