Toyota's Profits. Whodunnit?

Cammy Corrigan
by Cammy Corrigan

When GM was in its final throes (about 2000 onwards) it was quite easy to see that GM would go under. Even though they were posting records profits, anyone but the shills knew that these profits came from the SUV boom and not from any long term sustainable plan. That’s fair to say, right? So now let’s move to Toyota. The cry I hear, these days, is “Toyota is the new GM! Toyota is the new GM!” (Why people have to say things twice, I’ve no idea. I’m not deaf, just stupid.) And there is certainly some evidence to suggest that. Piling on the incentives, suspect quality, etc. But then something comes along which, seemingly, blows that theory out of the water.

The BBC reports that Toyota is announcing massive profits for the second quarter (about the height of the witch-hunt). Toyota earned for the period of July to September (Toyota’s fiscal year goes from the beginning of April to the end of March) 98.7b Yen. That’s about $1.222b. Toyota was so bullish about this profit that they raised their profits forecast (again) to 380b Yen, which is about $4.7b.Toyota’s executive vice president, Mr Satoshi Ozawa, did give the customary warnings about the strong yen and also said of a “very tough business environment, characterized by the radically and seriously appreciated yen in recent months, the risk of slowdown in demand recovery in the United States and Europe and falling demand following the end of the eco-car subsidies in Japan.” The only area he didn’t mention was India and China, the two markets which Toyota were weak in.

When I read this story, I just couldn’t believe it. Where did those profits come from? So I went to Toyota’s official website to dig a little deeper. On it, it gives a breakdown of where the profits came from.

In Japan, operating loss improved by 205.7 billion yen, to a loss of 52.0 billion yen.”

Ok, so the profits didn’t come from Japan.

In North America, operating income increased by 119.0 billion yen to 145.9 billion yen, including 9.8 billion yen of valuation losses on interest rate swaps. Operating income, excluding the impact of valuation losses from interest rate swaps, increased by 143.7 billion yen to 155.7 billion yen. The increase was due to improved earnings from the financial services segment.

OK, some of the profits came from North America.

In Europe, operating loss improved by 9.7 billion yen, to a loss of 8.9 billion yen.


Operating income in Asia increased by 98.8 billion yen, to 164.2 billion yen.


In Central and South America, Oceania and Africa, operating income increased by 32.3 billion yen to 72.9 billion yen..

So, losses in Europe, unsurprisingly, and increased income from Asia and the rest of world is good news. But where did the majority of their profits come from? Then the answer comes in the next paragraph.

In the financial services segment, operating income increased by 59.3 billion yen, to 183.7 billion yen compared to the same period last fiscal year, including 0.4 billion yen of valuation losses from interest rate swaps. Excluding these valuation losses, operating income increased by 76.6 billion yen to 184.1 billion yen. This was thanks to our better-than-expected used car pricing that resulted in a decrease in our loan-loss and residual-loss related expenses, partially through reversal of the relevant provisions as reported for the first quarter as well as an increase in our lending balance following reinforcement of our financing programs.

Toyota’s financial services are going great guns! Just like another company, before its bankruptcy… Now, as long as you don’t write mortgages for houses, financial services always have been like printing money for a car company.

Cammy Corrigan
Cammy Corrigan

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  • Ponchoman49 Ponchoman49 on Nov 05, 2010

    I'm sure they same some on slave labor in other countries too and financial wheeling and dealing just adds frosting to the cake.

  • 65corvair 65corvair on Nov 05, 2010
    For the record, I do not like Toyota. While there quality slipped to levels that is still better than many compainies, it slipped non the less. Toyota has made efforts to improve even more. If I was an auto company, I would be very afraid. They are still well managed, and only getting better. Toyota will be a major car company for the nest fifty years, GM no. GM has learned little or nothing from there problems.
    • APaGttH APaGttH on Nov 05, 2010

      If they were well managed, one of the worst corporate PR disasters in modern economic history would have never happened. They are apparently so well managed that GM will be the top car maker by production for 2010; so Toyota sat on top for all of one year. Who was the first importer to sell two-million cars in a single year in China?

  • THX1136 Always liked the Mustang though I've never owned one. I remember my 13 yo self grabbing some Ford literature that Oct which included the brochure for the Mustang. Using my youthful imagination I traced the 'centerfold' photo of the car AND extending the roof line back to turn it into a small wagon version. At the time I thought it would be a cool variant to offer. What was I thinking?!
  • GregLocock That's a bodge, not a solution. Your diff now has bits of broken off metal floating around in it.
  • The Oracle Well, we’re 3-4 years in with the Telluride and right around the time the long term durability issues start to really take hold. This is sad.
  • CoastieLenn No idea why, but nothing about a 4Runner excites me post-2004. To me, they're peak "try-hard", even above the Wrangler and Gladiator.
  • AZFelix A well earned anniversary.Can they also attend to the Mach-E?
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