Toyota Motor Corp. has upgraded its forecast of operating profit for the full year by 8% as it believes the yen will weaken, but it gave a poor outlook for sales in North America, its largest market, where sales for the quarter fell to their lowest in close to three years.
The largest automaker in Japan continues to struggle in an attempt to increase its North America sales, where most automakers are grappling for customers with big discounts, particularly for sedans as the preferences of drivers shift to pick-ups and SUVs. This increased marketing costs for not just Toyota but other auto manufacturers.
Profitable growth for its North American region is important to the Japanese automaker to help sustain large investments that are planned to be made in the rapidly growing new technologies like automated driving functions as well as artificial intelligence.
On Tuesday, Toyota said it was now expecting operating profit for the full year to be 2 trillion yen or $17.54 billion, which is up from its previous 1.85 trillion yen forecast. The automaker said that the increase was based on a new assumption that the Japanese currency would trade at 111 yen to one U.S. dollar, up from a previous estimation of 110.
The new updated profit forecast was similar to the operating profit of last year which was 1.99 trillion yen and was in line with Wall Street expectations of 2.04 trillion yen in operating profit.
Executive Vice President of Toyota Osamu Nagata said the improved forecast was from for the most part a positive impact of currency, adding that activities in marketing, including incentives financially in the U.S, would cut overall profitability during 2017.
In its quarter ending September, Toyota sold 673,000 vehicles across North America, which was down from one year ago of 684,000. It was the lowest sales for a quarter at Toyota for North America since the quarter ending March of 2015.
Toyota is anticipating lower retail sales for the year in North America for its year to March 2018, while at home sales in Japan dropped 4.2% during the recently ended quarter to just over 543,000.
Honda Motor Co. the third largest Japanese automaker and Subaru which is smaller, both posted earlier in November that they sold less vehicles in their North America units during the September ending quarter and spent more on sales incentives to bring down inventories.