Tokyo. A price jump of 16.7 percent: Investors reacted euphorically to Toyota's half-year balance sheet on Thursday. The trigger was the increase in the forecast for operating profit by 14.7 percent to 3.9 trillion yen (21.9 billion euros) for the fiscal year ending in March 2027. The optimistic forecast for the future came despite the fact that the world's largest car manufacturer is burdened by US tariffs, competitive pressure from China and the Iran war.
The results were eagerly awaited. Former CFO Kenta Kon has been running the group since April. It is intended to stop the gradual increase in the break-even point and the decline in profitability - which could have been successful in a first step. With an expected margin of 7.3 percent, the previous year's level would almost be reached and there would be no further losses in profitability.
In addition to the numerical outlook, the Japanese company management announced a comprehensive organizational reform in order to be able to act more quickly. The group is also planning to expand into robots for factories, other industries and everyday life, it is said.
The current outlook was preceded by a clear warning: the group's margin had halved to just 4.5 percent in the first quarter of this calendar year. There was great concern that Toyota could find itself in a similar downward spiral as the European manufacturers. Kon has now managed to slow the downward trend for the time being.
From April to September, the group's sales fell by 4.6 percent to 5.4 million vehicles. The reason for this was the transfer of the truck manufacturer Hino to the new listed holding Archion - a joint project with Mitsubishi Fuso, the Japanese subsidiary of Daimler Truck.
Meanwhile, sales rose 9.5 percent to 26.9 trillion yen, and operating profit rose 9.2 percent to 2.2 trillion yen. Net profit increased by a quarter to 2.3 trillion yen. However, a large part of this was also caused by exchange rate gains: the yen was weaker than expected, which caused foreign conversion results to rise.
Toyota benefits from its global market leadership in hybrid cars. The combination of electric and gasoline engines is only considered a transitional technology to fully electric drive. But the end of electric car subsidies in the USA and the possible postponement of the end of combustion engines in Europe extend the attractiveness of the interim solution.
Andreas Ries, Global Head of Automotive at the consulting firm KPMG, had also predicted this year that the trend would give the car manufacturer a “tailwind”. At Toyota, the proportion of partially and fully electrified cars is 55.6 percent. It should continue to rise in the future.
The strong market position allows Toyota, especially in the USA, to avoid discount battles. Toyota's October sales incentives were more than 50 percent below average at $1,577, according to a Morgan Stanley analysis.
Toyota wants to make up for its weakness in purely battery-powered cars over time. Chief Financial Officer Yoichi Miyazaki announced: “Looking ahead to 2030, we will build a corporate structure in which battery-electric vehicles have a solid base of ten million vehicles, the core of which consists of hybrid vehicles.”
Despite these successes, the group, like the German manufacturers, has problems with competitive pressure from China. The Japanese car analyst Takaki Nakanishi sees Chinese car manufacturers as the biggest challenge for the Japanese competition. “Their technological level has already reached that of the Japanese manufacturers,” he says – particularly when it comes to the combination of cars, electrification and software, as well as the pace of development.
Toyota is therefore focusing on learning from China - in order to grow again there and in other markets. That's why the group is not only consolidating its Chinese joint ventures, but also wants to start an electric offensive from January. CFO Miyazaki formulates the strategy: “In China for China, in order to attract new customers and accelerate our growth again.”
In Southeast Asia, where Toyota is the market leader, the company even wants to beat its Chinese rivals at their own game. “When introducing new models, we will incorporate the knowledge gained in China in order to significantly increase our cost competitiveness,” he announced.
At the same time, a comprehensive reorganization on January 1st is intended to streamline the automaker's bureaucracy, speed up decisions and strengthen company values. Human resources, finance and corporate administration are bundled in a “Kanri” group. The term can be roughly translated as supervisory group. According to Miyazaki, Toyota wants to build a professional support team “that promotes the satisfaction of our colleagues and empowers them to overcome challenges in the workplace.”
The new group for Toyota philosophy and education also serves this purpose. None other than Chairman of the Board of Directors Akio Toyoda, the former CEO and grandson of the company founder, is taking over. He should anchor Toyota's experiences and values in the next generation of managers.
Miyazaki also fleshed out the advance into the robot industry that was announced in September. "We will turn our internal need for 400,000 robots and our annual need of 1 trillion yen for replacing aging equipment into an opportunity for our business growth," he said.
With this internal need behind us, Toyota wants to develop robots and, according to Miyazaki, “expand sales to other manufacturing companies and industries and offer our products in lifestyle areas.” However, he did not name any specific sales targets.
In Europe, Toyota is currently fighting the Franco-German car pact with all its might. It would exclude electric cars not built in the EU and possibly the UK from subsidies. This would also affect Toyota's previous models.
Toyota is promoting its major commitment in Europe, where the group is the second largest supplier. The idea: Cars produced in Japan and Turkey should also be included. CEO Kon and Federal Chancellor Friedrich Merz are said to have explained this position during his visit to Japan at the end of October.
During his visit to Asia, the Chancellor was also able to listen to complaints in South Korea - probably not without effect. The intensity of the criticism “slightly surprised” him, the Chancellor said on October 30 at the end of his trip to Asia in Seoul. “I will of course raise this at the next European Council,” he said. He was conveyed his concerns very intensively. Then he agreed: “I’m taking it seriously and I’m taking it with me.”
