WionDrive News Desk 
Toyota Motor is anticipated to announce a significant increase in its third-quarter profit on Wednesday and is likely to revise its full-year outlook upwards, attributing its success to a combination of strong demand and a weaker yen exchange rate.
Resilient Amid Global Economic Concerns
Despite growing apprehensions regarding the global economic landscape, Toyota, the world’s leading automaker in terms of sales, has exhibited remarkable resilience. Toyota recently revealed that it sold 7.5 million vehicles, including its Lexus brand, during the first nine months of the year. This figure reflects a nearly 7% increase compared to the same period in the previous year.
Continued U.S. Demand
Toyota is poised to continue benefiting from rising demand in the United States. The recent six-week strike against Detroit’s Big Three automakers, which concluded this week, had a negative impact on U.S. rivals, positioning Toyota for further gains. Seiji Sugiura, an analyst at Tokai Tokyo Research Institute, noted that Toyota and other Japanese car manufacturers are likely to experience growing demand. Consequently, they won’t need to offer extensive incentives to sell cars, contributing to more profitable sales.
Caution for the Future
However, Sugiura also expressed a note of caution regarding the longer-term outlook. He highlighted that by the same period next year, U.S. economic conditions may deteriorate, and manufacturing or labor costs could increase, potentially making sales more challenging.
Strong Q3 Operating Profit and Revised Full-Year Forecast
In the forthcoming report, Toyota is expected to reveal a nearly twofold increase in its operating profit for July-September, reaching approximately 1.08 trillion yen ($7.19 billion), based on the consensus estimate among 10 analysts surveyed by LSEG. Furthermore, the company is projected to raise its operating profit forecast for the fiscal year ending March 31, 2024, to around 4 trillion yen. This represents a 33% surge compared to its existing forecast of 3 trillion yen, as indicated by the consensus estimate from 24 analysts.
Recovery in Domestic Production and Favorable Currency Exchange
Toyota’s production in its home market saw a substantial rebound, increasing by around 27% during the first nine months of the year compared to the same period in 2022. This underscores the automaker’s ability to overcome the disruptions caused by last year’s chip and part supply shortages.
The yen has experienced a decline of approximately 12% against the U.S. dollar this year, amplifying the value of Toyota’s overseas sales.
Market Performance and Challenges
Toyota’s shares have witnessed a remarkable ascent, surging nearly 45% this year, notably outperforming the roughly 18% rise in the Nikkei average.
Nonetheless, Japanese automakers, including Toyota, face escalating challenges due to the global shift towards electric vehicles from traditional gasoline-powered cars in key international markets. Additionally, suppliers report challenging business conditions in China.
Shintaro Ito, Chief Administrative Officer at Toyota group company Aisin, expressed that Japanese automakers are encountering significant difficulties in the world’s largest auto market. Production for the entire Chinese market has fallen short of expectations, with the country’s transition to battery-powered vehicles notably favoring China’s BYD.
Moreover, concerns persist regarding weak demand for vehicles due to fragile economic conditions in Southeast Asian markets, including Thailand, Indonesia, and Vietnam. The potential impact of higher U.S. interest rates on consumer spending further contributes to uncertainties in the global automotive landscape.
