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Toyota forecasts 80 per cent profit drop due to COVID-19

Toyota predicts global automobile sales will rebound to previous levels, but is expecting to see a huge drop in profits due to the current pandemic.

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Derek Fung
Derek Fung

Toyota has released its financial results for the 2019/20 Japanese financial year, which runs from April to March, revealing its prediction for new car sales in a world rocked by the Coronavirus pandemic.

The automaker estimates its operating profit for FY2021 will fall almost 80 per cent to only ¥500 billion ($7.2 billion), down from ¥2.4 trillion ($35 billion) in the year just past.

Interestingly, sales revenue is only forecast to drop by roughly 20 per cent to ¥24 trillion ($347 billion).

Toyota says the “impact of COVID-19 is wide-ranging, significant and serious”, but believes the global car market “will gradually recover after bottoming out during April and June of 2020” with sales returning to roughly the same rate as before.

Some automakers are beginning to reopen a percentage of their factories, but output will be hampered by social distancing and health measures, as well as potential problems in the supply chain.

Many regions remain in lockdown, and consumer desire to buy new vehicles may be depressed to economic and job security concerns.

In addition to potentially making a small profit this financial year, Toyota currently has around ¥4.4 trillion ($64 billion) in cash, so it should be able to ride out the pandemic and its economic after effects.

Some smaller automakers are currently shoring up their balance sheets by borrowing billions of dollars, with Mazda reportedly asking its lenders for $4.5 billion.

For the financial year just finished, Toyota and Lexus sold 8.958 million vehicles across the world, which is essentially line-ball with the previous year. Around 2.2 million of those vehicles were sold in Japan.

Across all class sizes, including kei cars, Toyota, Lexus and Daihatsu had a record 45.5 per cent market share in Japan.

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Derek Fung
Derek Fung

Derek Fung would love to tell you about his multiple degrees, but he's too busy writing up some news right now. In his spare time Derek loves chasing automotive rabbits down the hole. Based in New York, New York, Derek loves to travel and is very much a window not an aisle person.

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