April 25, 2024

Toyota Quarterly Profit Nearly Doubles

Net profit in the Japanese automaker’s financial first quarter beat analysts’ expectations by a wide margin, and underscored the boost Toyota and other automakers have received from the economic policies of Prime Minister Shinzo Abe of Japan. Those policies have galvanized Japan’s export industry by weakening the yen by about 15 percent since last year, increasing the value of products sold overseas.

Toyota actually sold almost 37,000 fewer vehicles in the latest quarter, compared with the same quarter last year, with sales falling in Europe, Asia and in Japan. Sales in Japan have slowed since government incentives for fuel-efficient cars expired last year. Toyota is also struggling in China, the world’s biggest auto market, because of a consumer backlash over a territorial spat between Beijing and Tokyo that has weighed on sales of Japanese brands. Meanwhile, auto sales continue to slump across the board in Europe.

It was the weaker yen, together with a strong showing in its biggest overseas market, the United States, that lifted Toyota’s bottom line. And those trends look set to continue: Economists predict the yen to weaken further, while the latest U.S. sales figures, for July, showed Toyota surging ahead of Ford for the first time in three years, with a 17 percent jump from the same month last year.

Toyota now expects net income for its full financial year that ends next March to reach 1.48 trillion yen, up slightly from a previous forecast of 1.37 trillion yen and an increase of 54 percent from its net profit last year.

In the latest quarter, net profit rose 93.6 percent from a year earlier to 562.1 billion yen, while operating profit rose 87.9 percent to 663.3 billion yen. Toyota attributed more than four-fifths of its operating profit increase to the weaker yen. Net revenue for the quarter rose 13.7 percent to 6.255 trillion yen compared to last year.

Helped by its strong numbers, Toyota is set to become the first automaker in the world to build more than 10 million vehicles in a single year. It said Friday that it would build 10.12 million vehicles this calendar year, up 180,000 units from a previous production plan. Those numbers include models made by Daihatsu Motor and Hino Motors, which are part of the Toyota group.

Article source: http://www.nytimes.com/2013/08/03/business/global/toyota-quarterly-profit-nearly-doubles.html?partner=rss&emc=rss

Group Proposes NHTSA Add Expertise in Electronics

In a widely anticipated study, the group called on the National Highway Traffic Safety Administration to add technical help, refine its investigative techniques and push for automakers to install “black boxes” that record data in car crashes. It also recommended that the federal agency form an advisory panel of specialists who can assist both in regulatory reviews and specific vehicle investigations.

With electronics systems becoming more complex, the agency needs to “gain a stronger understanding” of both the hardware and computer software that automakers are installing in their latest models, the group said.

The National Academy of Sciences was asked to review procedures at N.H.T.S.A. after the agency’s investigation of unintended acceleration of Toyota vehicles and a possible link to electronic-control systems. The Japanese automaker recalled more than eight million vehicles worldwide in 2009 and 2010 to fix sticky accelerator pedals or replace faulty floor mats that Toyota had claimed could cause unintended acceleration.

In a statement, the safety agency said it had “already taken steps to strengthen its expertise in electronic control systems,” but added that it would review the recommendations by a committee of the National Academy of Sciences to do more.

The agency said it would “continue to evaluate and improve every aspect of its work to keep the driving public safe, including research to assess potential safety concerns and help ensure the reliability of electronic control systems.”

Members of the science committee said that despite its shortcomings, the safety agency had done all that it was capable of doing to determine why Toyotas were suddenly accelerating out of control and causing serious accidents. They concluded that the agency had correctly closed its investigation after failing to find evidence of defects in Toyota’s electronic throttle systems.

Federal regulators accepted Toyota’s explanation that accelerator pedals or floor mats had been causing the problem. They closed the investigation last February after a separate study by the National Aeronautics and Space Administration also found no electronic defects.

“The agency got this right, and that was subsequently confirmed by the NASA report,” said Adrian K. Lund, president of the Insurance Institute for Highway Safety and a member of the National Academy of Sciences study committee.

The chairman of the study team, Louis J. Lanzerotti, stopped short of ruling out electronic malfunctions as a possible cause of sudden acceleration. “It’s impossible to prove a complete negative, but all the data available to us indicated the conclusion that there was no electronic or software problem,” said Dr. Lanzerotti, a physics professor at the New Jersey Institute of Technology.

The 16-member study committee focused primarily on how the agency, and later NASA, conducted their investigations, and whether the results yielded conclusive evidence of causes beyond pedals, floor mats or driver error.

And while the committee found the decision to close the investigation “justified,” it questioned the overall competence of the agency to regulate automotive electronics.

“It is troubling that the concerns associated with unintended acceleration evolved into questions about electronics safety” that the agency could not answer convincingly, necessitating assistance from NASA, the report said.

The committee also called for a review of how the agency’s investigators share data with its researchers, and supported the agency’s recommendation that electronic data recorders, or black boxes, become standard equipment in new vehicles.

The committee recommended that the agency “give explicit consideration to the oversight challenges arising from automotive electronics” and “develop and articulate a long-term strategy for meeting the challenges,” the report said.

One auto safety consulting firm, Safety Research and Strategies, expressed disappointment with the committee report because it had reviewed the agency efforts rather than holding its own investigation into the Toyota incidents.

“It is an incredible assertion for them to say that N.H.T.S.A. is not equipped to deal with electronics, but that they were justified in closing this investigation,” said Sean E. Kane, a founder of the firm, based in Rehoboth, Mass.

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In a First, Chinese-Built Cars Arrive in North America

The cars, in fact, are not even from the myriad Chinese automakers whose North American ambitions have been stymied by inferior quality and sometimes laughably poor performances in crash tests.

Instead, the Japanese automaker Honda is crossing the threshold by importing subcompact cars into Canada from one of its plants in China. This month, Honda Canada began receiving its smallest model, the Fit, from China instead of Japan, as part of a strategy to produce more vehicles outside its home country.

The decision allows Honda to eke out higher profit in a segment of the auto market where margins are extremely thin, especially since the high value of the yen cuts into all Japanese automakers’ overseas operations.

“The yen has been getting stronger and stronger,” Jerry Chenkin, executive vice president of Honda Canada, said on Tuesday.

Few car shoppers are likely to notice the change, and there is no expectation that Chinese-made cars are destined for the United States anytime soon. But the Honda imports are significant because vehicles are among the few categories of consumer products in North America for which manufacturers had not turned to China to try to cut costs.

“There’s been much talk about Chinese cars being sold in North America, but we hadn’t seen that yet,” said Michelle Krebs, a senior analyst with Edmunds.com, an automotive research Web site. “These are from a well-known, major global automaker, so that eliminates some of the challenges that face Chinese automakers.”

All the major automakers have plants in China, which they generally use to make vehicles to sell there. Only 3 percent, or 580,000, of the vehicles built in China last year were exported. Many automakers are reluctant to use that capacity to supply other countries because they want to maximize sales in China, now the world’s largest car market.

Mr. Chenkin said that the move had relatively little to do with direct costs. He declined to comment about wage differences between Japan and China.

“From what I understand, in terms of the cost of production for the Fit, the difference between China and Japan is not significant,” he said. “But the exposure of the yen exchange rate is of concern to Honda and other manufacturers.”

Lower disposable incomes and higher gasoline prices in Canada mean that small cars like the Fit are more popular there than in the United States. Honda’s profit on the Fit is further squeezed by a 6.1 percent import duty, while many competing models enter Canada duty-free because they are made in Mexico or the United States.

Honda is building a plant in Mexico that is scheduled to start assembling the Fit for the United States and other countries in early 2014. Honda is likely to use that plant to supply Canada as well, most likely making the importing from China a temporary measure.

Honda has been exporting the Fit from China to 27 countries, mainly in Europe where it is sold as the Jazz, for about five years, so there is no concern in Canada about the quality of its production, Mr. Chenkin said.

“We are fully confident that these vehicles meet all Honda standards,” he said. The company has imported electrical power generators to Canada from Honda plants in China for some time without encountering quality issues or customer resistance, he said.

John Mendel, executive vice president of American Honda, said that there were no plans to supply dealers in the United States with Chinese-made Fits.

Ms. Krebs said Honda and other automakers would have a more difficult time selling cars assembled in China to Americans than to Canadians and Europeans. Although made-in-China products are common in the United States, most cost a small fraction of the price of a car. Even established automakers like Honda are hesitant to risk turning off buyers with Chinese imports, particularly because the United States is an important source of profit and prestige.

“Canada’s always been much more open to cars from places that it was not acceptable for the U.S.,” Ms. Krebs said. “Honda has a production system that it uses every place in the world. Consumers can be pretty confident that the same standards apply.”

Analysts note that American car shoppers were largely skeptical of Japanese and Korean vehicles in their early days here and would tend to react similarly to models made in China, at least initially. A study earlier this year by the consulting firm GfK Automotive found that about one-third of Americans were open to buying a car from China. Younger respondents were more amenable.

The Fit is a relatively small-volume car in Canada, with sales of 2,802 through November. That is down 55 percent from the same period in 2010, largely because of supply shortages in the wake of the earthquake and tsunami in Japan in March.

Honda has a large manufacturing presence in Canada, where it builds the Civic, several Acura models and engines. It is hiring an additional 400 workers in Alliston, Ontario, where production of CR-V sport utility vehicles will begin next month.

Nick Bunkley reported from Detroit and Ian Austen from Ottawa.

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