Toyota Motor was at giddy heights in 2008. Profits soared to a record high. The Japanese company knocked General Motors off its perch as the world’s largest car maker.
Then an extraordinary run of bad news – the global economic crisis, a huge recall scandal and a devastating earthquake and tsunami – led Toyota’s chief executive, Akio Toyoda, to declare the company a step away from irrelevance.
After five difficult years, Toyota is picking up where it left off. It said this week that net income for the September quarter rose 70 per cent and that it expected profit to rebound to near-record highs for its full financial year, thanks to favourable exchange rates and a more streamlined cost structure.
Toyota raised its net profit forecast for the year to 1.67 trillion yen ($17.9 billion), up from 1.48 trillion yen. The car maker – again the world’s largest by number of vehicles sold – said it expected net sales of 25 trillion yen and operating income of 2.2 trillion yen. If Toyota meets its forecast, it will be almost back to its best year on record, in 2008, when it earned 1.72 trillion yen in net profit on sales of 26 trillion yen.
For the three months to September 30, sales grew 16 per cent to 6.28 trillion yen.
Nobuyori Kodaira, an executive vice-president, attributed the strong results to a weaker yen, which increases the value of the company’s earnings overseas. He also credited the change in fortune to a concerted undertaking to reduce costs, both within Toyota and at its suppliers.
‘‘Of course, the weakening of the yen worked in our favour,’’ he said. ‘‘But the effort we and our partners put into driving down costs also led to this turnaround.’’
Toyota is outshining its domestic rivals. Last week, Nissan slashed its profit forecast because of slowing demand in emerging markets and mounting recall costs. Honda said sales were brisk in the US and Japan but that its profits had been weighed down by heavy investment in new production lines.
At the heart of Toyota’s cost savings has been a strategy called the new global architecture, led by Mr Toyoda, a scion of Toyota’s founding family. The program involves sharing the same parts across a wider range of models, and adopting standard parts used by other global car makers. The 2015 Prius petrol-electric hybrid is to be the first model fully manufactured under that new initiative.
Toyota is also on the offensive again in next-generation green technology. The company, a pioneer in hybrid cars, said it would unveil a prototype hydrogen fuel-cell vehicle at the Tokyo Motor Show this month.
The four-seater sedan has a range of 500 kilometres and it can be refuelled in minutes, according to Toyota. The car maker hopes to sell its first fuel-cell car in 2015.