Toyota reveals 99% nosedive in North American operating profit

Posted Mon Aug 11 2008 7:27 AM by Siddharth Raja

Last week saw Toyota announce its first profit drop in nine years, with the carmaker revealing a 39% decline in its global operating profit the quarter ending in June this year. The industry juggernaut has now revealed an even worse result in percentage terms for its North American unit, with profits for the past quarter plunging from $1.4 billion to just $15.2 million in a one year period - a nosedive of 98.9%.

The startling drop in performance has been attributed to the U.S. leasing crisis, a strong yen, falling sales of large SUVs and pickups, plus growing inflation in other areas.

Speaking with Automotive News, Toyota’s executive vice president Mitsuo Kinoshita said that sales were down significantly but vehicle residual values were remaining steady. "Relatively speaking, we are selling vehicles at high residual values, and we are not impacted greatly right now," Kinoshita explained to reporters.

In recent years, Toyota has relied on the North American market to provide roughly half of its total operating profit, which explains the 39% drop the carmaker is currently experiencing. While the North American market remains stagnant, Toyota is settings its sights elsewhere - especially in burgeoning markets such as the Middle East and Russia, which are still experiencing strong economic growth.

Last week the company also announced that it will lay-off up to 800 workers at a plant in Japan that builds SUV models for its Lexus brand as well as the Highlander SUV.

Reader Comments

Mon Aug 11 2008 8:24 AM
bc says

wow!
Mon Aug 11 2008 2:09 PM
beken says

I think it has a lot to do with the state of the American dollar against other world currencies? As the USD recovers, that number should go up a bit.
Tue Aug 12 2008 5:17 PM
Laz says

I agree with beken but have to add the US economy is not in the greatest condition at the moment.

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