Strong demand from China buoys Toyota as weakness in US persists

By Reuters - Global Times Source:Reuters-Global Times Published: 2019/2/14 22:23:41

Toyota Motor Corp's quarterly profit edged up as demand for its bread-and-butter car models from cost-conscious Chinese buyers helped offset bleak North American sales.

Japan's biggest automaker attributed the smaller forecast to unrealized losses from equity investments, but, in an indication that business was still strong, it kept its full-year operating profit view unchanged at 2.4 trillion yen ($22 billion).

The automaker posted Asian sales of 464,000 units in the third quarter, up 15 percent from a year earlier, as strong demand in China for its Corolla and Levin sedans continued into the end of 2018.

Popularity of its luxury Lexus brand also helped it buck a broader slowdown in the world's biggest auto market.

Toyota's global sales rose 2.8 percent to 2.71 million units with Asia making up for the slack in North America, where its sales slid 7.5 percent to 680,000 units.

"When one region is underperforming, other regions can compensate for that weakness. Likewise, when some vehicle models are underperforming, other models can compensate," Executive Vice President Shigeki Tomoyama told reporters at a briefing.

"It's a work in process, but as we diversify our markets and our models, little by little we're starting to see this happen."

The Japanese automaker has been hit hard in the US by slowing sales of its models such as the Corolla and the Camry, as well as by its steep discounting to boost sales over the past two years as overall demand stagnated.

In contrast, the Corolla, Levin and Camry were Toyota's top three selling models in China in 2018, outselling larger ones like the RAV4 sport utility vehicle crossover, as buyers reined in expenses amid an economic slowdown exacerbated by the China-US trade war.

Toyota sold 1.47 million vehicles in China in 2018, up 14 percent, and aims to lift sales to 1.6 million this year, even as it and other automakers brace for another tough year in the country.

Auto sales in China last year contracted for the first time since the 1990s, hurt by the phasing out of purchase tax cuts on smaller cars and the trade war. The world's No.2 economy grew at its slowest pace in almost three decades in 2018, and growth is expected to weaken further this year.

But Japanese automakers, such as Toyota, Honda and Nissan, are expected to benefit from warming political ties between Tokyo and Beijing at a time when the China-US trade war is weighing on rivals such as Ford.

Posted in: COMPANIES

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