Investing in Japan: Toyota Motor proved its ability to survive COVID-19

COVID-19 caused stagnant sales for Japanese automakers

Seven major Japanese automobile manufacturers have finished announcing their consolidated financial statements for FY 2019. Most of them suffered less profits compared to previous year due to the spread of the new coronavirus. 

Nissan posted a net loss of 671.2 billion yen because of decreasing sales and increasing structural reform costs. Mitsubishi Motors Corporation, which forms a coalition with Nissan, also has a net loss of 25.7 billion yen. Honda, Mazda, and Suzuki all recorded lower sales and profits. 

On the other hand, Toyota Motor Corp. posted an increasing net income by 10.3% to 2,076.1 billion yen, although its sales decreased by 1%. SUBARU, which had strong sales in the US also increased sales and profits.  

Japanese media is pointing out that Toyota has proved again its ability to maintain high profitability even in a difficult environment. While many companies remain undecided about their financial forecasts for the fiscal year ending March 2021 because the impact of the new coronavirus is uncertain, Toyota disclosed its forecast of a net income in the black, although operating income will decrease by nearly 80%.

Toyota sales may have hit bottom

Regarding the latest sales situation, Toyota's global sales in April were 423,302 units, a 46.3% decrease from the same month last year due to stagnating sales under the influence of new coronavirus. 

Sales in the US, Toyota’s main market, was halved and sales in Europe decreased by more than 80%. Japanese investors expect Toyota’s global sales may have hit the bottom in April because Toyota has resumed operations at factories around the world including the United States in May although it continues adjusting production volume. 

In China, Toyota resumed business activities at all dealerships from the end of March, and sales in April increased 0.2% year on year to 142,899 units, showing tangible signs of recovery in business results. 

Recently, Japanese media is reporting that Toyota has begun selling all Toyota models at its four dealerships nationwide. Previously, four dealerships sold their own exclusively vehicles. 

"Toyota" dealers sold premium vehicles, "Toyopet" dealers offered medium-priced cars, "Corolla" dealers provided mass-market models, and "Netz" dealers targeted younger drivers. 

However, Toyota changed the sales strategy to respond to the shrinking domestic market caused by the declining birthrate and aging population in Japan. It is expected that this movement will lead to the consolidation of dealerships and further improve Toyota's sales efficiency.