Toyota’s earnings may fall in 2023 due to high material costs

It said an unprecedented surge in material costs has hit vehicle production

By Will Rimell, Autocar UK calendar 14 May 2022 Views icon5192 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp

Toyota achieved record profits last year despite being knocked by the Covid pandemic but it has warned of a shortfall in 2023 caused by strong industry headwinds.

Bosses say Toyota's earnings could fall by as much as a fifth next year because an “unprecedented surge” in material costs has hit vehicle production.

The Japanese firm, which presented its financial results for the 2021/22 financial year in Tokyo  said profits hit a record three trillion yen (£18.6 billion), up 36 percent, beating a previous high from 2016. It achieved this record despite a 15 percent drop in car sales, from 8.95 million units in 2020, to 7.65m in 2021.

However, Toyota predicts a profits loss to 2.4tn yen (£14.9bn) in 2022/23, despite expecting to sell 8.85m vehicles globally this year, up 7.5 percent from 2021. As well as citing the soaring costs of materials and shipping, it also blamed the ongoing semiconductor shortage, the Covid-19 pandemic, and “geopolitical instability” as reasons for this projected shortfall.

"We need to think about how we can respond to material inflation by eliminating the distinction between original equipment manufacturers and suppliers and working together as one," chief financial officer Kenta Kon told reporters, including Reuters.

"Since the price of materials is rising, we need to work to reduce the amount of materials we use as much as possible and to replace them with less expensive materials." President Akio Toyoda also told the meeting that the firm’s “unwavering focus” is to bounce back from this projected hit, by “making even better cars as part of a product-centred approach”.

This was something backed up during the presentation, with the firm confirming it raised prices of its line-up due to an “increased customer appreciation” of the brand, which, it says, has allowed it to improve profits.

Also read
Toyota cuts global production

Toyota crosses the 2 million mark

Tags: Toyota
Electric Jimny among five Suzuki EVs confirmed for Europe

auther Autocar Pro News Desk calendar28 Jan 2023

The 4x4 is one of five new electric cars Suzuki will launch in Europe by 2030

Microvast to be battery pack supplier to Ree Automotive’s commercial EVs

auther Autocar Pro News Desk calendar28 Jan 2023

Microvast’s MV-C Gen 4 lithium-ion battery packs to power REE’s P7 fully-flat commercial EV platforms with REEcorner tec...

Continental bats for development and use of open-­source software

auther Autocar Pro News Desk calendar26 Jan 2023

Technology major publishes Free and Open-Source Software manifesto which emphasises importance of collaborative software...