No car company can claim to have had a bigger comeback since the recession than Toyota. Chief executive Akio Toyoda has worked tirelessly to streamline Toyota’s global organization chart and increase the company’s emphasis on newer models, flashy designs and fuel economy. Toyota recently announced that it was on pace to earn its biggest-ever annual profit in its fiscal year that ends in March. A weaker yen and strong sales helped drive earnings for the year.
The Japanese company projected that it would earn net income of 1.9 trillion yen ($18.8 billion) for the year. That figure is higher than the profit of ¥1.7 trillion it reported six years ago, before the global financial crisis decimated demand for new vehicles. The reported annual profit would also be higher than the combined 2013 earnings for General Motors, Ford and the Chrysler division of Fiat Chrysler Automobiles.
In recent years, Toyota has endured huge recalls of some of its most popular vehicles, a tsunami in Japan and a steep drop in sales because of slowing demand. Karl Brauer, an analyst at the auto research firm Kelley Blue Book said, “They went through a lot over the past four years and they have learned from it.” The global financial crisis that began in 2008 drastically reduced sales volumes in North America and Europe. Shortly after, the company nearly lost its stellar reputation for quality when it was forced to recall millions of its cars.
The company recalled over 10 million vehicles in 2009 and 2010 for a variety of problems tied to unintended acceleration of several of its models. The company is still working to resolve lawsuits that stemmed from the recalls. Then in 2011, Toyota lost significant production after the earthquake and tsunami in Japan. “Everything went so wrong so quickly for Toyota,” Mr. Brauer said. “It was almost surreal because Toyota was never known to slip up.”
The strong profits for the year will help bankroll Toyota’s plans for continued expansion. However, even with all of the good news, Toyota’s executives are expressing caution about the global markets’ strength for the future. The company’s managing officer, Takuo Sasaki, said, “The outlook, especially for emerging markets, is very unclear. We need to stay vigilant of any adverse effect the recent financial instability may have on the real economy and auto markets.”
