Toyota in excellent shape, despite pandemic or chip shortage
Japan’s number one car manufacturer, Toyota, has published financial results that are better than expected. Moreover, the carmaker foresees an even better next year, despite the shortage of semiconductors threatening the whole sector.
For 2020/2021, the year of the pandemic, Toyota has never been in the red and has generated a net profit of €17 billion, a 10,3% rise. The operating profit went down slightly (around €16,5 billion, -8,4%) and the sales (€206,2 billion, -8,9%), but it was better than expected.
At Toyota, they forecast an even better 2021-2022. The net benefit has to rise to €17,4 billion (+2,4%), the operating benefit has to grow by 13,8%, and the yearly turnover has been estimated at more than €227 billion.
In 2020, Toyota also became the number one car manufacturer in the world. The new financial year (April 2021 – March 2022) foresees the production of 10,55 million vehicles (the brands Lexus, Hino, and Daihatsu included). The group produced 9,92 billion vehicles last fiscal year.
“The performance of Toyota was exceptional and in stark contrast with some of its rivals,” says automotive analyst Satoru Takada (TIW research bureau, Tokyo) to AFP. The rival mentioned here is Nissan, which has lost some €3,5 billion last year and still foresees red figures for 2021-2022.
Thanks to Fukushima
Toyota has not only digested the pandemic well, but it has also anticipated the semiconductor shortage that has hit the car sector worldwide. “Our forecasts are taking the risk of semiconductor shortage into account, but we also do everything to avoid perturbations in the supply chain,” says Kenta Kon, the CFO.
For the manufacturer in these difficult times, this’ luxury situation’ had started being prepared 10 years ago, when the nuclear catastrophe severely hit the whole Japanese industry in Fukushima, Japan. It lasted six months for the manufacturer to recover total production capacity.
Recuperating from the disaster, Toyota has considerably strengthened its ties with the suppliers, even the most remote. Therefore, it has the opportunity to react immediately when a crisis is pending.
“Toyota learned a lesson in 2011, better than anyone,” says Christophe Richter, automotive analyst at CLSA. “Now it is better prepared than every other manufacturer.” Many car companies have reacted at the time, “but Toyota has done it more profoundly and has been perduring until today,” says an anonymous, slightly jealous source.
“Toyota has always been a leader in the development of supply chain systems, and many others have tried to copy them,” says Joshua Cobb, automotive analyst at Fitch Solutions to AFP. “Now, it has been the first to abandon the Sacro-saint ‘just-in-time’ supply chain partially. In the place came a hybrid model where it stocks critical components like semiconductors in large numbers.”
That’s what the German manufacturers are only planning to do now. Another advantage for Toyota is that the largest number of semiconductor suppliers is Japanese or at least Asian. European or American manufacturers have far less influence here.
The fact that Toyota isn’t constantly renegotiating prices once contracts are signed helps too. “Toyota has excellent relationships with its suppliers,” says a source close to a big Japanese supplier. “And when we get orders from several clients at the same time, one has to privilege the most stable and powerful… which is often Toyota.”
For a long time, Toyota has been a cool lover of battery electric vehicles (BEV), preferring hybrid technology, in which they were the forerunner. However, lately, it has announced a totally electric portfolio with much more ambition.
Last Wednesday, Toyota also announced having sold 2,2 million electrified vehicles in 2020/21, most of them hybrids, an increase of 12,3% in one year. The next fiscal year hopes to increase this to 2,8 million vehicles, reaching no less than 8 million in 2030. Two million of these should be pure electric or equipped with fuel cells.
In 2030, Toyota wants to sell 100% electrified vehicles in Europe, 95% in Japan, and 70% in the US. In 2035, all Toyota sales must be electrified in China.