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 automaker 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 ¥13.9 billion ($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.