Tumbling Profits Force Toyota CEO Into Crisis Mode

Steph Willems
by Steph Willems
tumbling profits force toyota ceo into crisis mode

Even as it develops efficient new platforms and streamlines its operation where it can, Toyota finds itself against the ropes as a falling yen and rising costs sends profits tumbling. Its end-of-fiscal-year financial statements, released today, are enough to send bean counters to the medicine cabinet in search of antacid, while the company’s president warns of more trouble ahead.

To Akio Toyoda, the increasingly gloomy picture has all the hallmarks of a failing sports team.

While global Toyota sales increased slightly in the fiscal year ending March 31, it’s what’s happening outside the dealership that concerns Toyoda. The company’s operating profit fell 30 percent to $25.62 billion and net profit dropped 21 percent to $20.73 billion. Overall revenue also took a haircut, falling 2.9 percent.

In the last fiscal quarter, operating profit fell 20 percent and net income 6.6 percent (to $3.58 billion). These numbers include the automaker’s Daihatsu and Hino small car and truck subsidiaries.

According to Automotive News, Toyoda doesn’t expect the situation to improve in the current fiscal year, either. He has told investors to brace for further losses and another bad fiscal statement a year from now.

“I feel a strong sense of crisis about whether or not we are actually executing car-making from the perspective of the customer in all Toyota workplaces, from development, production, procurement and sales, all the way to administrative divisions,” Toyoda said. “In the case of sports, booking two consecutive years of losses would mean you are failing. I hate to be beaten.”

More streamlining is required as labor and R&D costs, as well as incentives to move vehicles in a stagnant market, have all eaten into the company’s profit margins. Another factor is beyond Toyoda’s control: currency. The automaker saw $8.45 billion lopped off its operating profit last year due to exchange rate fluctuations.

While Toyoda plans to spend less money going forward, his company’s expenditures haven’t proved fruitless. Much work went into the development of the TNGA platform to underpin many of its vehicles, including the next-generation Camry, and plenty of cash went into retooling factories to handle the new builds.

Still, the automaker feels the need to develop and build product in a more efficient way.

“When it comes to making ever-better cars in a smart way, it is becoming apparent that there is still room for improvement,” Toyoda said.

[Image: Toyoda Motor Corporation]

Join the conversation
2 of 42 comments
  • Eyeflyistheeye Eyeflyistheeye on May 11, 2017

    I've always liked Akio Toyoda since he seems like he sincerely cares about his company and making good cars. As an old-school Toyota fan, I think Watanabe created more problems with his chase of the poisoned title of "world's largest carmaker" than Toyota would like to let on. However, I don't know if he's going in the right direction. The C-HR gives nobody coming out of a competing compact car or SUV any reason to trade-in with its low horsepower and unappealing powertrain. Was it so hard for them to create a hot version with the Lexus 2.0t? And the ugly is just getting endemic. I still think Toyota and Honda don't realize that just about everyone except for Sergio might not be at their levels of quality, but that their quality is more than good enough for most.

  • Jeff S Jeff S on May 11, 2017

    I doubt that the Japanese are undervaluing the yen. Since 1992 the Japanese have had no to low inflation and their economy has been stalled. The Japanese companies that have overseas manufacturing are better able to weather the economic conditions. Toyota is in a much more competitive market than it once was and it no longer has a monopoly on quality.

  • ToolGuy CXXVIII comments?!?
  • ToolGuy I did truck things with my truck this past week, twenty-odd miles from home (farther than usual). Recall that the interior bed space of my (modified) truck is 98" x 74". On the ride home yesterday the bed carried a 20 foot extension ladder (10 feet long, flagged 14 inches past the rear bumper), two other ladders, a smallish air compressor, a largish shop vac, three large bins, some materials, some scrap, and a slew of tool cases/bags. It was pretty full, is what I'm saying.The range of the Cybertruck would have been just fine. Nothing I carried had any substantial weight to it, in truck terms. The frunk would have been extremely useful (lock the tool cases there, out of the way of the Bed Stuff, away from prying eyes and grasping fingers -- you say I can charge my cordless tools there? bonus). Stainless steel plus no paint is a plus.Apparently the Cybertruck bed will be 78" long (but over 96" with the tailgate folded down) and 60-65" wide. And then Tesla promises "100 cubic feet of exterior, lockable storage — including the under-bed, frunk and sail pillars." Underbed storage requires the bed to be clear of other stuff, but bottom line everything would have fit, especially when we consider the second row of seats (tools and some materials out of the weather).Some days I was hauling mostly air on one leg of the trip. There were several store runs involved, some for 8-foot stock. One day I bummed a ride in a Roush Mustang. Three separate times other drivers tried to run into my truck (stainless steel panels, yes please). The fuel savings would be large enough for me to notice and to care.TL;DR: This truck would work for me, as a truck. Sample size = 1.
  • Art Vandelay Dodge should bring this back. They could sell it as the classic classic classic model
  • Surferjoe Still have a 2013 RDX, naturally aspirated V6, just can't get behind a 4 banger turbo.Also gloriously absent, ESS, lane departure warnings, etc.
  • ToolGuy Is it a genuine Top Hand? Oh, I forgot, I don't care. 🙂