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Produced by Zhineng Automobile

ToyotaAutomotive released its FY2025 first quarter financial results report(March-June 2024). Against the backdrop of a complex and changing global economic environment, Toyota's financial performance is still very good.

In the case of weak demand,Toyota achieved an increase in operating profit despite a decline in production and sales due to foreign exchange rate fluctuations and cost control.

● Sales revenue:11,837.8 billion yen, an increase of 1,291 billion yen;

● Operating Revenue:1,308.4 billion yen, an increase of 187.5 billion yen, and an operating profit margin of 11.1%;

● Pre-tax income:1872.2 billion yen, an increase of 151.7 billion yen;

● Net income attributable to Toyota:133.33 billion yen, an increase of 2.19 billion yen, and a net profit margin of 11.3%.

Part 1

The key to profit change: exchange rate and cost control

● Toyota's operating income growth in the second quarter of 2024 is due to the following main factors:

◎ Foreign Exchange Rate：Foreign exchange rate changes contributed 37 billion yen to operating income, particularly the depreciation of the yen against the U.S. dollar and the euro.

◎ Cost Control：Through strict cost control, Toyota achieved an operating income increase of 5.5 billion yen, including 9.5 billion yen in cost reduction effects and 4 billion yen in strengthening of supplier infrastructure and material prices.

◎ marketing：Marketing efforts increased operating income by 7 billion yen, thanks to an increase in the proportion of hybrid models, expansion of the value chain and price adjustments.

● Next, let’s look at the overall market situation.Total sales were 2.252 million units, a slight decrease from 2.326 million units in the same period last year.

◎ Japanese market (421,000 units):Sales and production in Japan declined due to certification issues and recalls, but Toyota still managed to increase its revenue in the Japanese market by strengthening infrastructure and cooperating with suppliers.

◎ North America (705,000 units), Europe (291,000 units) and Asia (436,000 units):Sales in the North American, European and Asian markets increased by 4.5%, 1.7% and 3.3% respectively, performing well.

Especially in hybrid cars（HEV）and electric cars（BEV）The sales proportion in these areas has increased significantly, further driving the growth of these markets.

◎ Other markets:A total of 398,000 units,

● In the field of electric vehicles, Toyota's performance is particularly outstanding:

◎ Hybrid Electric Vehicle (HEV)：Year-on-year growth was 23.8%.

◎InsertHybrid Electric Vehicle (PHEV)：Year-on-year growth of 8.5%.

◎ Battery Electric Vehicles (BEV)：Year-on-year growth of 49.5%.

The sales share of electric vehicles increased from 34.2% to 43.2%. Toyota's strategic adjustment in the electric vehicle market has achieved remarkable results, but it still faces challenges in supply chain management, including rising raw material prices and increased labor costs.

However, Toyota has effectively alleviated these pressures through close collaboration with suppliers and forward-looking investments.

Part 2

Japanese car companies’ camp division

In the Chinese market, Toyota has actually entered a less profitable mode., the total profit was less than 60 billion yen, and the sales volume was 411,000 units, which was 82.4% of last year.

In the long run, the Japanese auto industry is facing a new wave of restructuring.Mitsubishi Motors plans to joinHondaandNissanAlliance,The alliance will form an automobile group with sales of approximately 8.33 million vehicles. Together with the Toyota Alliance with a scale of 16 million vehicles, it will form the two major camps in the Japanese automobile market, marking the completion of the domestic automobile enterprise restructuring.

The restructuring is different from previous confrontations between manufacturers, but rather a response to the rise of emerging forces in the era of electric vehicles.

America'sTeslaand ChinaBYD（BYD）China has performed outstandingly, while Japanese automakers have a weak presence in this field.The competition of the new generation of cars depends not only on hardware, but also on updating the operating system.（OS）To improve functionality.

Honda, Nissan and Mitsubishi Motors are hoping to catch up in EV and software development through huge investments.By 2030, Honda plans to invest 10 trillion yen in EV and software development, while Nissan plans to invest about 2 trillion yen in electrification by 2026. Japanese automakers are striving to find their place in the global automotive industry restructuring to cope with competition from emerging forces such as Tesla.

Toyota is the leader in building its own core alliance, so the overall benefits also need to be maintained.