TOKYO—Toyota Motor Corp. President Akio Toyoda has spent a decade tightening cost controls, trimming fat and elevating efficiency in an attempt to make Toyota more resilient for the next downturn.
Now that the downturn is here, Toyota is hanging tough.
Japan's biggest auto maker emerged as its only major profitable one in the latest quarter. Toyota eked out a razor-thin profit as rivals slumped into the red.
Honda Motor Co. and Subaru Corp., which also reported earnings last week, each booked operating and net losses in the April-June period, when the COVID-19 pandemic hammered the global industry, forcing factories to suspend output and dealerships to temporarily close.
Nissan Motor Co., Mitsubishi Motors Corp. and Mazda Motor Corp., which announced their financial results earlier, were also in the red-ink club for the three months ended June 30.
Toyota hung onto profitability partly through disciplined cost cutting and a faster-than-expected rebound in China, the epicenter of the pandemic in the early days of the outbreak. Toyota's operating profit in China surged in the quarter as sales there rose 14 percent.
"We have been steadily working to muscle up," a Toyota spokesman said. "Such efforts bore fruit in the first quarter. We have been making efforts with our suppliers and dealerships."
But the impact of the pandemic is undeniable. Toyota expects to lose some 1.8 million units of volume this fiscal year because of the worldwide plunge in sales, the company said last week.
Toyota forecast that its global wholesale volume will fall 20 percent to 7.2 million vehicles, with North America sliding 14 percent to 2.3 million units, a decline of about 380,000 vehicles. And the automaker predicted its operating profit will fall 79 percent for the fiscal year ending March 31, 2021, while net income will drop 64 percent.
Toyota may have bucked the loss-making trend, but operating profit nearly evaporated in the fiscal first quarter ended June 30, plunging 98 percent to $129.4 million.
Over the previous two fiscal years, Toyota's operating profit consistently ranged from $4.66 billion to $6.52 billion a quarter.
But as its global retail sales slid by nearly a third to 1.85 million vehicles in the most recent quarter, Toyota's revenue fell 40 percent, and its net income tumbled 74 percent to $1.48 billion.
In China, Toyota's factories resumed normal operation starting March 30. But most plants in other regions only started coming back online in May.
Toyota's North American business booked a regional operating loss of $909.8 million in the period, as regional wholesale volume slumped 62 percent to 285,000 vehicles.
At Honda, the pandemic took a $4.09 billion bite out of the bottom line, leaving the automaker with a $1.06 billion operating loss in the quarter. Executive Vice President Seiji Kuraishi said Honda forecasts that its operating profit will fall 68 percent in the current fiscal year, while net income will take a 64 percent dive.Honda's North America business booked a regional operating loss of $724.5 million in the quarter as North American sales fell 68 percent to 159,000 vehicles. Sales in the region are expected to finish the fiscal year at 1.54 million vehicles, a decline of 16 percent from a year earlier.
Subaru also felt the bite of COVID-19 as the virus caused chaos in its biggest market, plunging parent company Subaru Corp. into the red for the most recent quarter.
Subaru had largely escaped the pandemic pain in January-March because the outbreak had not fully taken hold of the U.S. market, which accounts for more than two-thirds of its global sales.
But in March, as the coronavirus breached American shores, Subaru's U.S. plant shut down, and its Japan factory suspended operations in April. Both returned to mostly normal output only in June.
The disruption pushed the parent company to a rare quarterly operating loss of $146.2 million. Subaru also booked a $71.7 million net loss.
At the beginning of 2020, Subaru was on track to achieve a remarkable 12th year in a row of record U.S. sales. But now, its U.S. sales have fallen 21 percent to 318,572 vehicles through July.
Subaru now expects its U.S. sales to end 2020 about 15 percent lower than last year's result, somewhere in the range of 590,000 to 600,000 vehicles, CEO Tomomi Nakamura said. In 2019, Subaru notched record U.S. sales of 700,117 vehicles.
Naoto Okamura contributed to this report.