“all the Chinese car companies add up to not enough for Toyota!” The above sentence began in early May this year.
Because on May 8th, Toyota released its results for fiscal year 2024 (April 1, 2023-March 31, 2024).
In terms of financial data alone, it can be said that the total profit of the company is as high as 5.
35 trillion yen and the net profit is 4.
945 trillion yen.
the year-on-year growth is 96.
4% and 101.
7% respectively.
The overall operating profit margin is as high as 11.9%. The net profit, calculated at the average exchange rate in May, is equivalent to 226.
7 billion yuan.
Originally, this kind of good financial report of a certain brand or a car company does not seem to lead to the phenomenon of “map cannon”.
But the so-called things in the world are afraid of comparison, after all, the end of April and the beginning of May every year, is also the major car companies intensive release of the previous year’s financial results.
So when someone summed up the financial results of the 18 major car companies in China last year and found that the total profits added up to less than 50 billion yuan, this kind of operation was used by many people for different purposes.
as a “traffic password”.
However, after all, 2024 has its particularity, one of which is that this year is recognized as the first year of boomerang.
So at the beginning of this month, when Toyota released its figures for the second quarter of fiscal year 2025 (July-September 2024, according to domestic custom for the 2024Q3 season), everyone inevitably had a kind of boomerang thrown half a year ago, coming back from the long river of time and heading straight to the door.
However it doesn’t hurt to watch the hustle and bustle but it is naive to fight for it.
Based on the necessity of analyzing and understanding the general trend of today’s automobile industry, it is very necessary to find out a “why” for Toyota’s enterprises of this magnitude in their financial statements.
With the profit margin falling off the cliff, posting large sections of the financial report will inevitably be suspected of the number of water words, and the chaotic tables and data are actually not convenient for readers to understand and read.
Therefore, it is still the same, we choose the main points and summary.
Here are just a few key points– 2024Q3 Toyota’s total sales are 11.
44 trillion yen, which is about 535.
8 billion yuan based on the exchange rate of November 22 written for this article (the same below).
Note that compared with the same period of the previous fiscal year, this part increased by less than 10 billion yen, which can be said to be a “slight increase”.
Toyota’s operating profit this quarter (profits made by enterprises in production and operation activities) is 1.
155 trillion yen, and the profit margin is slightly less than 10.
1%, equivalent to about 54.
1 billion yuan.
It is worth noting that the operating profit margin for the same period last year was 12.
6%, down by about 2.5%. The third part is more paradoxical.
Toyota reported a net profit of 573.
77 billion yen, or 26.
937 billion yuan, after tax for the quarter, with a net profit of just over 5%.
In the same period last year, the net profit margin was still 11.2%. As a result of the comparison Toyota’s net profit margin fell by more than 55% compared with the same period last year.
All in all, on the intuitive feeling of the latest Toyota earnings report, it seems that only looking at the sales volume and the total volume is as if the years are quiet, while taking a closer look at the profits will instantly fall off the altar.
In particular, the contrast is particularly pronounced when compared to Toyota’s second quarter (2024Q2) figures for fiscal 2025 released in early August.
So after seeing a clear phenomenon, that is, profit margins plummeting, let’s try to clarify the root of the problem from data feedback from different regional markets.
2024Q3, Toyota’s global sales figure for the second quarter of fiscal 2025, was 2.
538 million vehicles.
Year-on-year decline of 3.
6%, the decline is not much, can only be regarded as fluctuations.
The performance of several major markets are: 517000 vehicles in the Japanese market, down 4.
2% from the same period last year, operating profit of 639.
2 billion yen, profit margin of 12.
0%, 469000 vehicles in the Asian market, down 2.
0% from the same period last year, operating profit of 242.
3 billion yen, profit margin of 10.
8% 256000 vehicles in the European market, down 5.
4% from the same period last year, operating profit 99.
7 billion yen, profit margin 7.
2%, North American market 643000, down 8.
5% year on year, operating profit 27.
3 billion yen, profit margin 0.
6%, Other (Latin America, Oceania, Africa, Middle East, etc.
) market 420000 vehicles, operating profit 91.
6 billion yen, profit margin 8.6%. If anyone has read the author’s previous articles, they will have a basic frame impression of Toyota and even the “good days” of Japanese car companies in the United States.
Summing up the above data, it is almost at a glance where the problem lies.
Of course, in today’s global economy, it’s not just North America that has a problem.
The global market, which shows a “universal decline” trend, as we all know, for Toyota, different from the Japanese market, the “Asian market” is actually mainly the Chinese market.
After all, Southeast Asia, South Asia and other markets, no matter how fast they boast about their development, or “the garden after decades of ploughing”, together are only a fraction of the Chinese market.
In the Chinese market, although the Japanese system, especially Toyota, has been shouting “here comes the wolf” because of the rise of local brands and the ensuing crazy price war in the past two years, but in fact, because Toyota’s joint venture car companies and dealers have been actively responding to the price war and following up with price cuts, the loss of market share is minimal.
And even at this stage of the price war, the entire Asian market excluding Japan still has a profit margin of 10.
8%, which shows how high the premium of the joint venture car companies has been.
But it also represents a bigger problem for its markets in Japan and Europe, as well as in North America, which has grown into a major “cash cow” over the years.
Thus it can be seen that the trouble faced by Toyota is far more than just the stereotype of “stuck in the Chinese market” and the lack of electrification (new energy).
The local decline is understandable.
From the end of 2022 to the whole of 2023, the Japanese economy was in a rebound cycle after the COVID-19 global epidemic.
The car replacement and car purchase demand that has been accumulated from 2020 to 2022 is concentrated and released into a cycle of about one year.
So it is bound to be unsustainable after 2024.
As for the European market, as the war between Russia and Ukraine has lasted for more than two and a half years, the soaring energy prices in Europe have gone beyond the limits of government economic subsidies to enterprises and are seriously affecting the economy of the entire EU region.
The automobile market as a wholeWeakness is perfectly understandable.
But what is really “different” is the North American market, which halved Toyota’s earnings this time.
The dual influence of the general environment and anxiety but both good and bad have to obey the general law of the economy as a whole.
The current round of interest rate hikes, which began in March 2022, has lasted for two and a half years after entering the first half of 2024 and before the rate cut was announced in September this year.
Six in 2022, four in 2023, and one this year.
The cumulative increase in interest rates is as high as 525 basis points.
Although the US economy had the abnormal phenomenon of “raising interest rates to stimulate the economy” in 2022 and 2023.
However, after entering 2024, everything finally became “normal”, that is, after the new crown epidemic, the economic overheating trend caused by the US government printing money and consumption was finally brought under control.
After entering the second half of the year, the overall social consumption tends to shrink, and the signs of recession are already more obvious.
So Toyota’s sales in the United States began to decline in the second half of this year but the overall economic trend reflected the performance of sales.
But the sharp decline in sales has been accompanied by a simultaneous collapse in profit margins.
After all, the North American market qualifies as Toyota’s cash cow because its profit margins have been fairly high in recent years.
You know, standing on the time node in the second half of 2024, the flagship version of the nine-generation Camry Camry dual-engine 2.
5HQ with a guide price of 259800, and a further discount of 20, 000 at the store is already the general recognition of domestic car owners.
Interestingly, until the end of 2023 in the Bay area of California, the previous generation of Camry’s low-profile model, steel wheels + plastic steering wheel + full halogen taillights, car owners want to immediately mention the car, but also have to increase the price by another 3000 yuan, a total of $39000 to drive away.
But from the first half of this year when the economic cooling caused by the interest rate hike began to be reflected in the auto market Toyota and its dealers in North America also began to act.
The first thing it uses is the successful experience in the Chinese market-price reduction promotion.
Starting from the second half of the year Toyota’s sales strategy in North America has changed its previous model.
With the support of the brand, dealers at all levels take the initiative to provide more and more preferential measures, but also give sales staff more bonuses and commissions than before.
The basic logic is that since one of the two former pillar markets of China and the United States has been seriously shaken Toyota is pinning its hopes on guaranteed sales in an economic cooling environment.
In fact, this can also be understood as, in the case of an inevitable decline in the total amount, try to grab the share of other brands into their own hands.
As the saying goes, if you meet a bear in the forest together, what if you can’t run? In fact, there is no need to do anything, as long as you can run better than your peers.
Part of the dark humor is that Toyota has plenty of ammunition to fight a price war in North America because of years of high profit margins.
And because it has gained a wealth of experience in price war from the Chinese market, it is very good at exchanging profits for shares.
We have reason to believe that from the perspective of the general trend of the overall economic environment Toyota’s profit margins in North America will rebound significantly in one or two earnings seasons thus contributing to the recovery of its overall global profit margins.
On September 18 this year, the Federal Reserve announced that it would cut its target range of the federal funds rate by 50 basis points to 4.75%. This is the first time it has cut interest rates since March 2022.
On the 7th of this month (local time), the target range of the federal funds rate was further lowered to 4.5-4.75%. Two consecutive cuts totaling 50 basis points mean that the dollar has officially pulled out of the two-and-a-half-year interest rate hike cycle.
According to the previous cyclical pattern the US consumer goods and retail market should gradually recover after four interest rate cuts.
At present, financial markets generally speculate that the Fed may make two more 25 basis point interest rate cuts this month and in the last month of this year.
This seems to mean that Toyota’s 2025 results released in early May should not be very bad.
This is believed to be the reason why Toyota cut only 100000 vehicles in its global sales forecast for fiscal year 2025 (April 1, 2024-March 31, 2025).
However the broader environmental relief brought about by interest rate cuts may be offset by another political risk.
After a lapse of four years, “understanding King” is about to “return like lightning”.
Although the “new” president has always supported the dollar’s low interest rate policy, he may even force the Fed to shorten the cycle of interest rate cuts when he takes office.
However, its “America first” economic policy, and the appointment of Toyota competitor Tesla’s CEO as a senior government official, is hardly optimistic about Toyota’s business fundamentals in the United States over the next four years.
Standing at the end of this treacherous year 2024 even for global companies such as Toyota it is increasingly difficult to grasp their own future.
However one thing is certain.
No matter how difficult the road ahead, the Japanese auto giant still has to overcome all difficulties to make up for its shortcomings in the field of new energy vehicles.
But there is not much time left for Toyota.
, return to the first electric network home page >.
