Toyota is tightening its grip after seeing its first quarterly profit fall in two years. To maintain profitability, Toyota plans to “put off investment decisions until the last minute,” including EV and aggregate investment.
Toyota announced that operating income for the first quarter of fiscal 2025 fell to $16 billion (2.64 trillion yen).
In the second quarter, operating profit fell 20% to about $7.55 billion (1.16 trillion yen), Toyota's first quarterly profit loss in two years.
The low profit is caused by the sale of fewer cars caused by certification problems that caused Toyota to stop production of the Yariss Cross and Corolla Fielder which are very popular in Japan. The Prius recall in the US also led to fewer cars being sold around the world.
As a result, Toyota's global production fell for the first time in four years in the first half of fiscal 2025. Toyota produced 4.71 million vehicles, down 7% from its record 5.06 million vehicles produced last year.
Toyota's domestic production fell by 9.4%, while overseas production fell by 6%. The company took a hit in China, where domestic automakers such as BYD continue to outbid foreign automakers in the market with competitive, low-cost EVs.
Toyota will hold off on EV investment until the last minute
Although Toyota said that the production of cars is expected to increase in the second half of the financial year, it is expected that the total for the whole year will be 9.4 million, which is less than 100,000 cars compared to last year.
The vice president of Toyota, Yoichi Miyazaki, revealed how Toyota plans to save working capital while investing in the company's future.
As EV and other next-generation technology investments drag down profits, Toyota will “hold investment decisions for HEV, PHEV, BEV, or FCEV” until the “last minute,” Miyazaki said. The company plans to monitor the market closely before making a decision.
Meanwhile, the company is still developing new technologies, including advanced EV batteries. Toyota's vice president confirmed that the company develops three types of EV batteries in-house: Ternary, LFP, and solid-state.
In March, Toyota's battery unit (Toyota Battery) became a wholly owned subsidiary. The company said the move helps “timeliness” and is important for mass production of different types of batteries.
“There are two important things we want to achieve,” explained Miyazaki. The first is to “increase how quickly we can respond to environmental changes in an age when it is difficult to predict the future.” Second, “to develop the basic skills that will enable us to continue in the future.”
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