Toyota Motor Corp is hitching its future to green cars, investing billions of dollars in gasoline-electric hybrids and fuel-cell vehicles, but for now its record profit performance is being powered largely by a gas-guzzling US market.
In the United States, relatively cheap gasoline prices helped to spur brisk 9% growth in industry-wide light truck sales in the first half of the year, making that one of the fastest-growing major global market segments - accounting for about one-tenth of global vehicle sales.
Toyota outperformed the overall US market, moreover, with its fresh model line-up - the Highlander SUV was redesigned in February and the Tundra pick-up got a facelift last September - powering a 10% rise in its January-June US light truck sales to nearly half a million vehicles.
That success is feeding the nearly $40bn cash pile that Toyota will tap for future green car investments.
“The U.S. is one of the few bright spots contributing to year-on-year profit growth for Toyota while it faces a slowdown in places like Japan and Thailand,” said Koichi Sugimoto, an auto analyst at Mitsubishi UFJ Morgan Stanley.
Light trucks, a category that includes SUVs, accounted for around 42 percent of Toyota’s total US sales in January-June, which were up 5% from a year earlier.
The strong showing continued in July, when Toyota’s total US sales rose 12% due to robust SUV demand and larger discounts, outperforming the industry’s 9% growth and surpassing Ford Motor Co to become the No 2 seller for the month.
Analysts forecast that Toyota’s April-June North American operating profit jumped at a double-digit rate from the same period a year ago, with Barclays auto analyst Tatsuo Yoshida putting the figure at 106bn yen ($1.03bn), up 30% year-on-year. The company will announce its first-quarter earnings on Tuesday.
Toyota’s North America numbers undercount the region’s actual contribution to profits, since they exclude much of the profits made from imported vehicles. Most of what Toyota earns through exports from its home country are counted with Japan profits, which likely fell in April-June due to a sales tax hike in April that dented domestic sales.