Toyota Motor Corp. predicted a record profit this fiscal year helped in part by President Donald Trump’s tax cuts and surging sales of the updated Camry sedan and RAV4 sport-utility vehicle in the U.S.
A reduction in expenses through cost cuts and a favorable foreign exchange environment is also helping the carmaker lift its annual net income forecast to a record 2.4 trillion yen (US$22 billion), beating analyst estimates. Asia’s biggest automaker also boosted its projection for vehicle sales.
President Trump’s tax cuts have helped a record number of companies to raise their profit guidance, according to strategists at JPMorgan Chase & Co. Toyota, which is setting up a new plant in the U.S., said it would gain about 292 billion yen from the tax reforms. Toyota’s rival Honda Motor Co. also last week raised its profit forecast for the year because of the reduction in tax rates.
Toyota said last year it’s saving costs through measures including the continued roll out of a new manufacturing process.
The money spared will help bolster spending on research and development to a record 1.06 trillion yen this year as President Akio Toyoda pushes the company deeper into new electrified powertrains and artificial intelligence, areas he says the automaker needs to lead.
America’s love for SUVs also reverberated through Toyota’s earnings. While boosting sales of the RAV4 SUV, Toyota also retained its status as the maker of America’s best-selling car last year with the redesigned Camry.
The carmaker captured 14.5% of the U.S. market in January, second only to General Motors Co.’s 17.2%, according to researcher Autodata.
Toyota raised its forecast for North American sales this fiscal year to 2.81 million vehicles from 2.79 million. That made up for slight downward revisions for sales in Japan and Europe.
Toyota projects research and development spending at a record 1.06 trillion yen this fiscal year, even as it cuts costs in other areas. In December, the carmaker announced plans to have at least 10 battery-electric vehicles in its lineup by the early 2020s, from zero now.
Like its rivals in the U.S., Toyota’s incentive spending is rising amid increasingly fierce competition. However, its average outlay per vehicle of $2,585 in January was less than half the $5,193 that GM spent and far below Ford’s $4,182, according to research firm Autodata Corp.
To post those January sales numbers, Toyota relied more on deliveries to rental-car companies, according to Cox Automotive. Fleet sales, which tend to be discounted, surged 69%t from a year earlier, the researcher said. Rental cars tend to end up in the used-vehicle market, which then compete against new model sales.
By Kevin Buckland and Nao Sano