Dive Brief:
- Toyota Motor Corp. reported a 34% year-over-year jump in operating income to 1.13 yen ($7.1 billion) in the second quarter of fiscal year 2027, an increase of 288.1 billion yen from the same period last year, according to the company's Nov. 5 earnings report.
- The automaker cited favorable exchange rates and ongoing cost reduction efforts for the increase in operating profit, along with brisk sales of hybrid vehicles, which boosted its sales revenue to 13.4 trillion yen in Q2 — a 1 trillion yen YoY increase.
- As a result of its Q2 performance, the company said it expects YoY growth this year and has revised its operating profit forecast upward, from 3.4 trillion yen to 3.9 trillion yen, for the fiscal year ending March 31, 2027.
Dive Insight:
The impact of U.S. tariffs erased all of Toyota’s North America profits in FY2026, but this year, the automaker is seeing its focus on hybrids translate to revenue success.
In North America, specifically, Toyota saw its operating income rise by nearly 189 billion yen during its first fiscal quarter. It set up the company to return to North America profitability for the entire fiscal year of 2027.
Toyota has said it aims to further restore profitability by leveraging its strengths in products, sales, and improved production operations. Among its initiatives is to increase hybrid vehicle production, which are in high demand amid soaring fuel costs.
To prepare for additional hybrid vehicle production, Toyota plans to increase production at its battery facility in North Carolina, its first in-house battery plant outside of Japan. The facility manufactures batteries for the hybrid vehicles it sells in North America. In Japan, annual production of next-generation hybrid batteries will be enough for about 600,000 hybrid vehicles in 2027-2028, the automaker said it in its Q1 earnings report.
The automaker also plans to move Tacoma pickup production from Mexico to Toyota Motor Manufacturing Texas. In July, Toyota announced a $3.6 billion expansion project of the Texas plant, boosting capacity by adding a second vehicle assembly line doubling the plant’s size by 2030.
Sales of Toyota and Lexus electrified vehicles accounted for 55.9% of the 2.66 million vehicles the automaker sold globally in Q2, up from a 46% share a year ago, the company reported. The increase was driven by strong sales of hybrids in the North American and European markets
"In North America, our steady efforts to date have helped us build a solid business foundation," Yoichi Miyazaki, EVP and CFO at Toyota Motor Corp., said in the earnings presentation, crediting "record-high sales last year" to strong demand for hybrid electric vehicles, along with low incentive levels and inventory days at its dealerships, among other factors.
Toyota Motor North America reported sales of 117,215 electrified vehicles in September alone, a 37.8% YoY increase.
“Vehicle sales, mainly driven by HEVs, increased steadily, supported by strong demand,” said Takanori Azuma, Toyota’s Chief Officer of the Accounting Group, of the company's global results, in an earnings presentation.
For the fiscal year ending March 31, 2027, Toyota is forecasting sales of 3 million vehicles in North America, down slightly from its previous projection. Global consolidated vehicles sales are projected to reach 9.7 million units.
