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August 8, 2020

Toyota Still Made a Profit Despite the Pandemic

Despite plunging sales amid the coronavirus pandemic, Toyota Motor Corporation still managed to squeeze out a profit in the latest quarter. Toyota’s results come as all other major Japanese players—Nissan, Honda, Subaru, Mazda, and Mitsubishi slumped to quarterly operating losses in the April to June period.

Toyota bucked the trend, but operating profit nearly evaporated, plunging 98 percent to 13.9 billion yen (US$ 129.4 million) in the automaker’s fiscal first quarter ended June 30.

In announcing the results last August 6, Japan’s biggest auto manufacturer, said net income tumbled 74 percent to 158.8 billion yen (US$1.48 billion) in the period, as revenue fell 40 percent to 4.6 trillion yen (US$42.8 billion).

Over the previous two fiscal years, before the COVID-19 outbreak, Toyota’s quarterly operating profit consistently ranged between 500 billion yen to 700 billion yen (US$4.7 billion to US$6.5 billion).

Global retail sales slid 32 percent to 1.85 million vehicles in the April to June period, including results from its Daihatsu small-car subsidiary and truck-making affiliate Hino. Worldwide wholesale volume dropped 50 percent to 1.16 million vehicles.

Cost cutting combined with lower labor costs and curtailed R&D outlays at Toyota helped offset the blow of falling sales, as the worldwide slowdown forced factories and dealerships to suspend operations.

Meanwhile, a faster-than-expected rebound in China also helped keep Toyota in the black. Operating profit in China actually surged in the April to June period as sales rose 14 percent.

Toyota halted production at plants around the world in response to government regulations meant to limit transmission of the coronavirus. And even in areas with fewer restrictions, Toyota scaled back output in line with falling demand to anticipating a huge pile up of inventory.

Toyota’s factories in China, the epicenter of the global coronavirus outbreak, resumed normal operation on March 30, but plants in other regions mostly started coming back online in May.

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