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Toyota details COVID hit to global sales – and recovery

Confident: Akio Toyoda has forecast a 20 per cent decrease in vehicle sales this financial year, equivalent to almost two million units, but believes TMC will remain profitable.

15 May 2020

TOYOTA Motor Corporation (TMC) president Akio Toyoda this week paused in his delivery of financial results for the past year to praise global efforts to end the COVID-19 pandemic and optimistically state that “there is no crisis that humankind cannot overcome”.


Delivering TMC’s 2020 financial year results (ending March 31) that showed a one percentage point slip in the car-maker’s revenue compared with 2019 to $A434 billion, the head of the world’s biggest automotive company said Toyota was ready to do “whatever it can to make itself of use” to combat the global health crisis.


In his address to shareholders, Mr Toyoda said COVID-19 would shake the outlook this financial year for TMC with a predicted decrease in vehicle sales of 1.95 million units – from 8.95 million in 2020 to 7.0 million units in 2021 – which will represent “a year-on-year decrease of more than 20 per cent”.


This, he said, “would be greater than the decrease during the global financial crisis”.


However, Mr Toyoda said TMC is forecasting a profit in the current financial year and an expected operating income of $A7.25 billion.


“Although this is our forecast at this time, if we are somehow able to achieve this level of our earnings, I believe that it would be the result of our having been able to strengthen our corporate composition,” he said.


“I think that what is important is thinking about why we should become strong and about how we go about becoming strong.


“For us to be useful in the world, I believe that we must become stronger together with our partners throughout the world.”


Mr Toyoda said TMC had taken the unprecedented step in the past seven years of building partnerships with other automobile and mobility companies through a series of alliances.


TMC is now partnering with companies including: Subaru (autonomous vehicles, EVs, JVs on new models) in which it now has a 20 per cent shareholding; Suzuki (4.9 per cent shareholding and partnering on autonomous vehicles); and others including Mazda, Uber, Pizza Hut and Amazon (alliances on various mobility and autonomous programs).


“Our basic stance is that alliances are not for taking control of partners based on the logic of capital, but rather for respecting each other and for co-operating through work with likeminded partners,” Mr Toyoda said.


“As a result, within an extremely short period of time, we have been able to establish a network with many partners, including those from other industries.


“We have largely changed our thinking from becoming strong as an individual company to becoming strong together as a group.


“Also, with undergoing a ‘complete redesign’ into a mobility company in mind, we are also engaged in recomposing our assets, such as by revising our cross-shareholdings and selling underutilised real estate.”


Toyoda-san said people were TMC’s key asset and it was vital that the company “continue to protect people who have acquired the techniques and skills that enable them to make what is necessary when the world needs it”.


“We are proud that we have been continuing to protect in Japan places in which such human resources can work and be cultivated,” he said.


“Even as we are now facing the COVID-19 crisis, there is not the slightest bit of distortion or wavering in this belief.”


He said he was critical of talk about “a V-shaped turnaround” with the pandemic.


The thought is that by “sacrificing employment, sacrificing domestic monozukuri (production) – by deciding to ‘stop’ various things, an individual company can turn its results around” but that, he said, “bothered him” and “was not right”.


“Regardless of how big or how small they might be, there are many companies in Japan that have clenched their jaws and protected their human resources who had techniques and skills, no matter how tough times were, or, more importantly, because times were tough,” he said.


“I believe that now is exactly the time that we need a society that can support such companies. I humbly request that you support companies that have supported Japan and Japan’s economy through monozukuri.


“At last year’s financial results announcement, I was asked if Toyota faces any challenges, and I replied: ‘The fact that there is a sense within the company that Toyota is doing fine.’


“I think that ‘bringing back what it is that makes us Toyota’ is equal to spending time on the past.


“I want my generation to be the last to spend time on the past. I want the next generation to be able to spend time on the future.


“That’s exactly why I hope to plant seeds for the future. This is what I consider to be the ideal way to pass the baton to the next generation.”


TMC’s revenue of $A434 billion for the 2020 financial year came from 8.95 million vehicle sales, down only 0.2 per cent on 2019.


The company’s net income rose to $A30.1 billion from $A27.32b previously but operating income fell to $A35.7b as currency fluctuations hit the company hard. In exchange rates alone, TMC was stung $A4.4b to take the bulk of its $5.5b income slump.


TMC’s operating officer Kenta Kon said in a statement that the drop was attributed to an erratic currency rate and the effects of the COVID-19 virus in March. 


Around its global sales areas, TMC recorded a 0.6 per cent growth in vehicle sales in Japan to 2.2 million units; North American sales of 2.7 million units, down 1.2 per cent; European sales of 1.03 million vehicles, up 3.3 per cent; Asian sales of 1.6 million, down 5.0 per cent; and ‘other regions’ including Central/South America, Oceania, Africa and the Middle East where vehicle sales totalled 1.37 million, up 3.3 per cent.


In Australia, Toyota sold 206,219 units in the Japanese April-March financial year, down 7995 units or 3.9 per cent on the previous corresponding period.

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