Toyota president worried over falling profits – report

Toyota president worried over falling profits – report

The alarm bells may have yet to ring over at Toyota, but there is growing concern as the company posted a 20.8% decline in net income in the fiscal year that ended March 31, from 2.31 trillion yen (RM88.11 billion) to 1.83 trillion yen (RM69.76 billion).

What’s more, the Japanese conglomerate warned that income is expected fall again, by an estimated 18.1% to 1.5 trillion yen (RM57.1 billion), in the current fiscal year that began on April 1. Automotive News reported that if that was the case, it would be Toyota’s first back-to-back decline in net profit in more that 20 years.

The less-than-stellar earnings were enough to rattle president Akio Toyoda who, during his speech, stressed in no uncertain terms the need to overhaul every part of the business.

“I feel a strong sense of crisis about whether or not we are actually executing car-making from the perspective of the customer in all Toyota workplaces – from development, production, procurement and sales, all the way to administrative divisions,” he said.

Part of the loss of income was attributed to effects of foreign exchange rates, but the company also increased expenditure by some 530 billion yen (RM20.19 billion) last year. It was reported that the extra money was spent on retooling its factories to build its next generation of vehicles – based on the Toyota New Global Architecture (TNGA) – including the building of a new facility in Mexico in 2020.

Toyota has also invested heavily in electrification and artificial intelligence, such as the US$1 billion (RM4.3 billion) it has channeled into AI development at its new Toyota Research Institute (TRI). “Approaching both software and hardware from all directions is Toyota’s way,” he said.

Toyota president worried over falling profits – report

In fact, Toyota’s research and development budget this year alone is expected to cost it over 1 trillion yen (RM38 billion), the fourth straight year this will have happened. Despite the lower income, however, Toyoda has no intention of taking his foot off the throttle.

“The present automobile industry is being asked to make a paradigm shift, for which, as I see it, especially AI, autonomous driving, robotics, connected systems and other new domains will hold important keys,” he said. “I want to continue planting seeds with a look to 10 or even 20 years into the future.”

In terms of electrification, Toyoda insisted the company approached it in a new, fresh manner, since it was late to the electric vehicle game. As an example of such a move, a new EV Business Planning Department sees him in a hands-on role as chief officer, beginning December 1.

Toyota president worried over falling profits – report

“When it comes to electric vehicles, every car, be it the Yaris or whatever, once it is electrified, the acceleration is all the same,” Toyoda told Automotive News. “The reason I am responsible for EVs as well is that I don’t want to make these cars a commodity. Even with the electrification of the vehicles, I want the prefix “I love” to be affixed to those cars.”

The new department, dubbed an “in-house venture company” by Toyota, has been modelled after startups such as Tesla and Google, with a flat, fast-moving organisation. Aside from Toyoda, there are just three other people at the helm, from suppliers Aisin Seiki, Denso and Toyota Industries.

“I want to change the way they work on EVs,” Toyoda said. “Maybe we will call them electric vehicles, but introduce connectivity. Think about Tesla. Tesla is producing cars. And Toyota is producing cars. But what Tesla is producing is something close to an iPhone.”

Toyota president worried over falling profits – report

So, Toyoda still wants to invest in future technologies, then – what he wants to change is the way Toyota builds cars, which he said should be smarter. “When it comes to making ever-better cars in a smart way, it is becoming apparent that there is still room for improvement,” Toyoda said.

“For example, might it not be the case that an over-enthusiastic desire to make ever-better cars is putting priority on improving our competitiveness in terms of performance and quality, while leaving issues of cost and lead time for later? Or, is the way we work capable of thoroughly implementing the basic principle of “appropriate sales price minus appropriate profit equals ideal cost?””

In his speech, Toyoda said he believes compact cars should be at the centre of its plan of building better cars, adding they should be small, safe and comfortable, as well as being able to provide a “stress-free driving performance” – all while being affordable.

Toyota president worried over falling profits – report

“In the in-house company system we introduced last year, we launched the Toyota Compact Car Company, which specializes in compact cars, made Daihatsu a wholly owned subsidiary, and established a compact car company for emerging markets, among other actions,” he said. “These we have done with an aim toward returning to the basics of carmaking for compact cars.”

Toyota is looking to increase its cost-cutting as a result of the increased expenditure as well as slowing sales – global retail sales increased by just 1.6% to 10.3 million vehicles, while revenue dipped 2.8% to 18.40 trillion (RM700.1 billion). These figures are predicted to fall further this fiscal year, Toyota said.

The restructuring of the company Toyoda embarked on last year resulted in internal companies with greater autonomy, and he said people needed to be patient to see the fruits of their labour. “Sales revenue is very slow to increase,” he said. “But in that environment…as the paradigm shift continues, we must make investments in those areas that do not produce immediate profit. That’s the difficult challenge we are confronting.”

Looking to sell your car? Sell it with Carro.

Certified Pre-Owned - 1 Year Warranty

10% discount when you renew your car insurance

Compare prices between different insurer providers and use the promo code 'PAULTAN10' when you make your payment to save the most on your car insurance renewal compared to other competing services.

Car Insurance

Jonathan Lee

After trying to pursue a career in product design, Jonathan Lee decided to make the sideways jump into the world of car journalism instead. He therefore appreciates the aesthetic appeal of a car, but for him, the driving experience is still second to none.

 

Comments

  • AI-generated Summary ✨

    The comments revolve around Toyota's falling profits, with many attributing it to outdated models, unexciting designs, and a perception of inferior technology compared to competitors like Honda, Mazda, and Korean brands. Several commenters feel Toyota's focus on hybrid and hybrid tech is costly and outdated, impacting sales. There is criticism of UMW as the sole distributor, which some believe hampers Toyota’s market growth in Malaysia. Many express that Toyota’s vehicles no longer appeal to younger, modern consumers seeking exciting, safe, and stylish cars, leading to declining sales of models like Camry and Corolla. Some comments suggest that Toyota needs to innovate and revamp its marketing strategies rather than rely on past reputation, and propose direct sales models to improve performance. Overall, the sentiment is that Toyota faces a significant challenge adapting to current market demands to sustain profits.

  • Toyol is Toyol on May 15, 2017 at 8:11 pm

    What do you expect Mr Toyoda? You company intentionally practises discrimination towards consumerism.You should wake up now coz all his time Toyota was overrated and overpriced product.When other manufacturers increased their quality standard,technology and lower the price..you definitely feel the pinch.By hook or by crook you must slice down prices too..if not you going further down faster than nuclear blast.Korean are now on par with your game yet they can sell much cheaper than you.Toyota is not King or God.You just being denied your slaughtered houses expension by fast growing competitors.

    Like or Dislike: Thumb up 26 Thumb down 3
  • Mikey on May 15, 2017 at 8:44 pm

    I-Say-Man, earning RM69.76 “billion” PROFIT U want 2 ring the alarm bell already ah. If that is the case, Mr Toyoda should learn from us M’sian man.

    We loose a million a DAY also NO problem. Please loose BILLIONS & then U can learn from M’sian on How to survive when U are in crisis.

    Well-loved. Like or Dislike: Thumb up 56 Thumb down 1
    • farghmee on May 15, 2017 at 10:31 pm

      Meanwhile Teh tarik n kueh lapis earn RM1.8 billion buta buta.

      Like or Dislike: Thumb up 47 Thumb down 4
      • Which company is it?

        Like or Dislike: Thumb up 46 Thumb down 49
        • Ollie on May 15, 2017 at 11:55 pm

          Lupa plak dh…Kitorang mmg mudah lupa

          Like or Dislike: Thumb up 20 Thumb down 17
          • Tak lupa. Cuma tak nak fitnah menfitnah saje.

            Like or Dislike: Thumb up 21 Thumb down 24
          • Sama L00 on May 16, 2017 at 3:25 pm

            Toyota is a 100% car making company. Car sale not good profit drop.
            Proton is hybrid, car sale not good ask from government lar. Some call it tongkat, some call pengemis, I call it leech, depend how you like.

            Like or Dislike: Thumb up 18 Thumb down 6
  • WT Fuchhhh on May 15, 2017 at 8:51 pm

    Ezy….Just get rid of UMW…..they dont have heart and are just plain dirty bloodsuckers.

    Like or Dislike: Thumb up 18 Thumb down 1
  • Kunta Abdul Malik Naik on May 15, 2017 at 8:52 pm

    Not a suprise. Toyota is no longer the people’s choice. Look at Malaysia, just visit the used car dealers, you tell me how many Altis and Camrys gathering dust there. Only the hilux and a certain extent the Vios is still selling, but even for the vios, sales have dropped drastically when Honda launched so many new models. Volkswagen and Honda have far better cars in their lineup. I wouldn’t we suprise one day Toyota is purchased by the world largest automaker, Volkswagen. Toyota uses old technology in its cars, they spent too much money in R&D for hybrid technology until it neglected other areas I.e. Power train, transmission, internal combustion engine technology etc.

    Like or Dislike: Thumb up 52 Thumb down 28
    • Shady on May 15, 2017 at 11:33 pm

      Malaysia or South East Asia is still a small market for Toyota. They rather focus on bigger markets such as USA or China. That is why we always get old tech and outdated products. Even in SEA, Toyota rather focus on bigger markets such Thailand or Indonesia. Blame our automotive policy and greedy distributors.

      Like or Dislike: Thumb up 26 Thumb down 1
    • At least VW would consider Toyota. Proton? U know the story…

      Like or Dislike: Thumb up 11 Thumb down 3
    • Old technology? Their hybrid tech is the most advanced, more advanced than most carmakers. If u want to talk about old tech, i think the one that most fit ur criteria is Proton. Where is Hybrid or even EV tech from Proton? Still developing fuel guzzling engines? The world is moving towards energy efficient direction but what is Proton doing? After all, Proton’s R&D money is paid in billions from the rakyat, the pipu have the right to know

      Like or Dislike: Thumb up 17 Thumb down 6
    • Mikey on May 16, 2017 at 8:19 am

      U are right. They spend too much time/$$$ into R & D for Hybrid technology bcos Toyo think EV/Hybrid is the way forward.

      Like or Dislike: Thumb up 3 Thumb down 2
  • Why Bumi? Why you cant say Malaysian. Enough with the racial behaviour, man!

    Like or Dislike: Thumb up 31 Thumb down 5
  • Falling profits not because the quality of product but because the wrong marketing strategies. Toyota is very good product.

    Like or Dislike: Thumb up 24 Thumb down 24
    • Jimmy on May 15, 2017 at 10:41 pm

      in the eyes of low and low-middle income people.

      Like or Dislike: Thumb up 10 Thumb down 10
    • Toyota very gud product: for the 90s era.

      Like or Dislike: Thumb up 9 Thumb down 11
      • If like that, Proton is better for the 80s in Saga era

        Like or Dislike: Thumb up 3 Thumb down 1
      • Btw, why too many honda owner sell their “good honda car” even after 2 years bought it? May be they not a Milo tin lovers.

        Like or Dislike: Thumb up 3 Thumb down 3
    • Agreed. Malaysian already knows how tin Milo is brv body. Little accident but big damage. Civic and accord also using recycled Milo tin.

      Like or Dislike: Thumb up 10 Thumb down 3
      • Brandon on May 16, 2017 at 2:41 pm

        No lah, good car like honda always using recycled coca cola tin.

        Like or Dislike: Thumb up 8 Thumb down 2
    • Jahok on May 16, 2017 at 8:24 pm

      Gd product n gd marketing strategy complements each other.. In dis case.. So so product n lousy marketing (Pricing n specs)

      Like or Dislike: Thumb up 1 Thumb down 0
  • camtakpro on May 15, 2017 at 9:50 pm

    Just setup a direct shop here, called Toyota Malaysia, and throw UMW away.

    That 70billion profit, already can open few Toyota Malaysia.

    Well-loved. Like or Dislike: Thumb up 55 Thumb down 0
    • leonardo on May 16, 2017 at 9:01 am

      This should send shockwaves in the automotive world. They are seen to be a very successful automotive company and respected worldwide for making relaible and quality cars.
      But times have changed. New buyers are looking for cars with exciting design, technologically advanced, safe and low running costs products.
      Perhaps Toyota should start making products that people wants, not what they think people wants. Being a global player, it is not easy. There is no “One Size Fits All.”
      Going back to basics is a good start. Ganbatte ne.

      Like or Dislike: Thumb up 7 Thumb down 1
  • 70b for toyota, I wonder how our proton will survive without bailout

    Like or Dislike: Thumb up 30 Thumb down 22
    • U support sure proton will survive…every topic discuss need relate to proton for what?

      Like or Dislike: Thumb up 39 Thumb down 44
    • leonardo on May 16, 2017 at 9:02 am

      This topic is about Toyota. Not Proton. Focus. Focus.

      Like or Dislike: Thumb up 27 Thumb down 30
  • Appoint more distributors like UMW. It maximizes profit by stripping out many features. U can save on R&D too!

    Like or Dislike: Thumb up 6 Thumb down 3
  • KNS…sent so many ppl to underworld and make big profit for less spec car still want AJAJ…puih!!!

    Like or Dislike: Thumb up 4 Thumb down 7
  • Sgt Scoop on May 15, 2017 at 11:17 pm

    I have a theory that Lexus is killing Toyota. At a time when consumers are expecting more and more from things like interior design and technology, Lexus puts a glass ceiling on Toyota’s ability to reach those expectations. The Camry should be a class leading car capable of tempting buyers away from BMW and Mercedes Benz but it isn’t. It’s a boring old car for ‘uncles’. All of the high end designs and modern tech goes to Lexus. The Mazda 6 and VW Passat are in the space where the Camry should be. Lexus took the Harrier too so Toyota don’t have a top end SUV in a booming SUV market. They have nothing to compete with the CX-5 or CRV because it’s in the Lexus showroom badged as the NX. Toyota have relegated their main brand to an also ran.

    Like or Dislike: Thumb up 32 Thumb down 0
    • Shady on May 15, 2017 at 11:34 pm

      Toyota have Harrier but not for sale here. The market is too small for Toyota to even consider.

      Like or Dislike: Thumb up 0 Thumb down 6
    • Shady on May 15, 2017 at 11:34 pm

      Toyota have Harrier but not for sale here. The market is too small for Toyota.

      Like or Dislike: Thumb up 0 Thumb down 6
    • I don’t think is Lexus which is killing them. In M’sia is UMW which is killing them. They have the RAV4 to compete against the CX-5, CRV and etc but UMW Malaysia is not bringing these cars in as CKD. You have to understand that the top management at UMW Motors are wage earners and don’t take risk. All try to play safe and don’t want to take risk by introducing new models. Typical GLC mentality. Sit around play politics and survive with big fat pay cheque.

      Like or Dislike: Thumb up 27 Thumb down 0
    • Jonn Dol on May 16, 2017 at 8:39 am

      Obviously the Camry is not pitched against the BMW & Merc Execs, it’s the Lexus IS & ES. Although certainly it’s a fact that the quality of the latest leading mainstream D-segment cars are closely approaching that of the Premium league (Mazda 6, VW Passat, Opel Insignia, Renault Talisman). Camry needs a major overhaul..

      Like or Dislike: Thumb up 6 Thumb down 0
    • thepolygonal on May 16, 2017 at 8:53 am

      Right on… same with Infiniti and Nissan. But lucky the CHR made it as a Toyota…. after seeing the Juke made it as a Nissan I guess. meanwhile HRV raking in sales and sales and sales…

      Like or Dislike: Thumb up 5 Thumb down 0
  • Not Toyota Fan on May 15, 2017 at 11:33 pm

    Toyota Corporation should overhaul the sole distributor market here by terminating UMW and open a direct Toyota (M) Sdn Bhd office here. Honda did exactly that & today they’re reaping the rewards for their efforts to get rid of sole distributor Kah Motors. Sole distributors in general does not have your company nor brand best interests at heart. They only want to make a quick profit without any care for your brand long term interest.

    Like or Dislike: Thumb up 21 Thumb down 0
    • Honda FTW on May 16, 2017 at 11:20 am

      From kah motors to DRB Hicom right? krikk krikk

      Like or Dislike: Thumb up 0 Thumb down 0
    • Who cares about UMW or Malaysian sales. It’s nothing to them which explains why we UMW can control all here. They are worried about Toyota as a whole worldwide. To me it’s due to the unexciting models they are selling. CHR and Prius are the only models worth noting internationally.

      Like or Dislike: Thumb up 0 Thumb down 0
  • Toyol Duck on May 15, 2017 at 11:49 pm

    Your Lexus sedan can’t sell well because of its ugly design.

    Your hybrid car isn’t that popular now as consumer have better choice of cheaper yet reasonable hybrid or EV.

    Your third world Toyota vehicle can’t sell well because still fitted with old technology.

    Your rival from your homeland making a come back by design a good looking car exclusively for local market, especially in South East Asia.

    Your rival from Korea getting stronger taking eating a big pie of your market in China, India, Europe and US.

    Now do you realise what’s your problem?

    Like or Dislike: Thumb up 17 Thumb down 9
  • This because the Toyota’s outdated engine. Want develop supercar ask to cooperate with Subaru & BMW. Then Altis diesel also used BMW engines. Please Toyota, launch the turbo & twin turbocharged engine.

    Like or Dislike: Thumb up 2 Thumb down 5
  • Mummy Yummy on May 16, 2017 at 7:40 am

    No worries, Toyota. Our local car manufacturer have faced this problem at many occasion, yet still remained cool and business as usual. Tea time and relaxed as usual.

    If desperate, Toyota can apply for a couple of billion worth soft loan. Just ask of our local car manufacturer how they do it….

    Like or Dislike: Thumb up 13 Thumb down 3
    • Yup. All they need is to get backstab by own jepunis pakat partners and later sell cheaps to them just like Mitsu.

      Like or Dislike: Thumb up 21 Thumb down 21
  • honest on May 16, 2017 at 10:56 am

    Sales drop because people dont want to buy.why? Customers have the answers

    Like or Dislike: Thumb up 3 Thumb down 0
  • Pan Pan Government kingdom on May 16, 2017 at 11:12 am

    Nowadays people tends to opt for fun, powerful and safe car and not to forget nice design and good material quality too… Toyota is outdated now from younger generation point of view. Thats why volkswagen group of company and other continental car control the world market now with interestion options. Japanese car no longer interesting…only mazda realize this so they are moving with the trend same as korean car company which in the correct path.

    Like or Dislike: Thumb up 5 Thumb down 0
  • Annoynimouse on May 16, 2017 at 7:19 pm

    I can understand that Toyota does whats best for them business-wise but for Malaysia I feel that Toyota is “forcing” their products on us consumers rather than actually offering highly superior products. They offer us just enough to keep us moderately satisfied. Then we buy into the whole “most reliable car” hype and tend to forgive them for giving us average, mostly spec-ed down products. Others follow suit.

    Like or Dislike: Thumb up 3 Thumb down 0
 

Add a comment

required

required