Toyota, the world’s largest carmaker, posted sky-high profits for fiscal 2023. for this year, however, the company wants to stop focusing on growth and invest in EV research.
Toyota posted booming profits and vehicle sales in its annual report on Wednesday. The world’s largest automaker seeks to take on the many challenges sweeping the modern car industry while maintaining its large competitive advantage.
Profits for the Toyota City-based company totaled 4.9 trillion yen ($31.9 billion), much higher than Toyota’s own prediction of 4.5 trillion yen. Revenues for the January-March quarter came in at 997.6 billion yen ($6.4 billion), a significant jump from last year’s 552 billion yen. However, Toyota’s chief executives claimed the weak yen against the US dollar contributed to the high figures and did not correctly represent the company’s growth.
Indeed, sales expanded but not as much as revenues and profits. Total sales for the 2023 fiscal year were 9.4 million vehicles, up from 8.8 million in 2022.
“The latest results show that our efforts have borne fruit, but we need to keep growing with the vision to become a mobility company,” Toyota CEO Koji Sato said.
Unlike other giant carmakers like Volkswagen, Ford, and General Motors; Toyota has yet to properly commit to the electric vehicles (EVs) market. The Japanese automaker focused heavily on hybrid vehicles, currently the sustainable vehicle of choice for most consumers.
However, competition and constant technological advancement call for immediate action. And Toyota intends to prepare.
Less profits, more research
Toyota said it wants to focus on research and technology in fiscal 2024, preparing for a “game-changing” move.
According to Toyota’s own statement, fiscal 2024 will yield 28% less profits, coming in at 3.57 trillion yen ($23 billion).
Although most consumers still prefer hybrid cars, EV production from China reached numbers that are impossible to ignore. In 2023, China became the world’s largest EV producer, overcoming Germany and Japan in one sweeping jump. China is also the largest car market in the world.
Chinese companies produce cheap and efficient electric cars, spreading them to markets around the world. Carmakers in Europe and Japan fear China’s overproduction and are trying to take action.
Volkswagen and Stellantis, among others, partnered with Chinese startups to exploit local technological development with European production know-how. Nissan and Honda, respectively Japan’s second and third-largest carmakers, are working together to jump into the EV market. Last month, Toyota unveiled a partnership with Tencent, a Chinese tech giant.
“We need to think about how we can bring about a game change,” Toyota CFO Yoichi Miyazaki said. He admitted Toyota was “well behind” Chinese competitors in key areas. However, they are determined to close the gap.
