Today’s 3rd quarter earnings announcement, made at the usual time (3pm) in the usual place (the basement bunker conference room of the Tokyo HQ) was Toyota how we learned to love it: Manage expectations, over deliver slightly, a Corolla of the quarterlies. It came as no surprise to Tomoco-watchers that consolidated vehicle sales for the 9 months since the start of the current fiscal on April 1, 2014 were reported as a bit light, down to 6.7 million by a 0.6 percent hair from the same 9 months in the prior. In reality, nobody expected them to grow. Only those adherent to the Church of the Bigger is Better were astounded to hear that despite lower sales, net income for the period increased 13 percent to 1.72 trillion yen. (Blogger-spoiler: You must read all the way to the end before curating this content.)
Profits were propelled by three simple factors: The yen is no longer in insane mode (a buck now buys 117 yen, which, while not cheap, will feel about right when you come to Tokyo). This converts cars shipped abroad into more money at home. Massive cost-cutting measures, undertaken during the currency-chaos, are hard to unwind, especially at thrifty Toyota. Reporters coming to the presentation still are given no more than a bottle of water, and a hand-out at 3pm. And finally, no money is being spent on feverish expansion, as it is the habit elsewhere.
Reporters, who expected to be given a signal that the building-stop would end, went home empty-handed. Except for a few words about why the mortar-moratorium is still in place, they were told that there will be, as it was said before, no new factories before March 31, 2016. However, they were also told to expect profits for the full fiscal to increase by 8 percent over the previous guidance when it will be reported three months down the road. As a result of the factors above, along with sundry others, Toyota expects to report an eye-blurring record profit of 2.7 trillion yen by the end of the fiscal. Revenge of the currencies: Converted into greenbacks, that kind of money now buys only $23 billion, so don’t run off to Hawaii, and spend it yet.
A look at Toyota’s regions provides some reason for the company’s caution: Except for North America, sales elsewhere in the world are down. The BRICs crumble. Like a driver on a dark country road, Toyota appears to move aside, and to motion tailgating Volkswagen to take the lead in 2015. Then, Toyota can take the wind out of the domineering doitsujin. Also, rumors are thick in Tokyo that Toyota may use the time, money, and breathing space that was gained by not scouting for greenfield locations, for a complete overhaul of its total operations. TNGA, as in Toyota New Global Architecture, may well be much more than a common parts catalog, or Volkswagen’s Mobiler Querbaukasten auf japanische Art. First full TNGA cars are expected for the 2017 season, setting the scene for a 2016 year of change.
At this point you, as the sole remaining attentive reader, will say: “Waitaminute, Schmitt, didn’t you tell me they are the world’s largest with more than 10 million cars? What’s with the 6.7 million for three months here?” And right you are.
Tripping rookie reporters for decades, Toyota’s “consolidated sales” are not what they seem. While other carmakers (you know who you are) insist on counting every car made at a Chinese minority JV, Toyota insists on calling “consolidated sales” those made by Toyota, Lexus, Daihatsu and Hino, excluding those made through joint ventures in China and elsewhere, you dig? There are “consolidated vehicle sales,” there are “Toyota and Lexus vehicle sales,” there are “total retail vehicle sales,” and they are always different, capisce?
Including China, sales actually were up slightly across the past 9 months to 7.65 million, and they are expected to be reported flat as a board at 10.1 million when the fiscal year ends.
For years, this reporter has suggested to draw a helpful map, to help reporters navigate the treacherous terminology. The DailyKanban is proud to report that this suggestion has finally been accepted as pictured above. Toyota’s kaizen department has been contacted for the customary gift certificate awarded after such an occasion in recognition of the soikufu, or the creative idea. The production value of the artwork is still a bit lacking, but there’s nothing that can’t be improved.