Toyota, the renowned manufacturer of the Camry sedan and luxurious Lexus models, has reported a significant decline in profits due to a production halt triggered by a certification scandal and multiple model recalls. This situation has had a damaging effect on the company’s sales figures.
During the July to September quarter, Japan’s largest automaker saw its profits plummet to less than half when compared to the same period last year. The company faced scrutiny after admitting to extensive fraudulent testing practices, which included the use of outdated data in crucial crash tests and erroneous airbag inflation assessments.
In response to the scandal, Toyota issued an official apology and temporarily suspended production for several models. This issue also extended to its subsidiaries, Hino Motors and Daihatsu Motor Co., which were found to have similar fraudulent test results.
In financial terms, Toyota recorded quarterly profits of 573.7 billion yen (€3.4 billion), a stark decrease from nearly 1.28 trillion yen (€1.8 trillion) during the previous year’s quarter. Interestingly, the company experienced a slight surge in quarterly sales revenue, rising to 11.44 trillion yen (€69 billion) from 11.43 trillion yen.
In the previous fiscal year, Toyota successfully sold over 11 million vehicles worldwide. However, the automaker now anticipates selling approximately 10.85 million vehicles by the end of the current fiscal year in March. In the latest quarter, vehicle sales dropped to 2.3 million units, down from 2.4 million.
Commitment to Investment in Human Resources
Toyota has vowed to enhance its operations by investing more significantly in its workforce and strategic growth areas. The company is pursuing a “multi-pathway” approach, which entails developing hybrids, fuel cells, and electric vehicles based on market demand. Such commitment extends to its subsidiaries and supply chains, reinforcing their resolve for future development.
According to Chief Financial Officer Yoichi Miyazaki, the decline in production during the first half of the fiscal year was attributed to efforts in resolving certification issues while reassessing their manufacturing environment and corporate culture. Additionally, Toyota’s production at its Indiana plant in the US was momentarily halted for recalls but has since resumed operations.
Despite these challenges, Toyota maintains its fiscal year forecast of 3.57 trillion yen (€21.1 billion) in profit, although this is a decrease from last year’s 4.94 trillion yen. As Toyota navigates these obstacles, all eyes will be on how they adapt and recover in this ever-evolving automotive landscape.
Photo credit & article inspired by: Euronews
