Toyota expects record profit on weak yen

Feb 04, 2015, 3:53 AM EST
A visitor passes the Toyota Motor Corp. logo on display at the company's showroom in Tokyo, Japan, on Wednesday, Nov. 5, 2014.
AFP/Getty Images

Toyota, the world's biggest carmaker, has raised its annual profit outlook after a weak yen offset a fall in domestic sales, reports the BBC. The Japanese giant now expects a record operating profit of 2.7 trillion yen ($22.93bn; £15bn) for the fiscal year to March, up from 2.5tn yen.

The weaker yen has boosted the value of the carmaker's sales overseas to make up for slow demand in Japan. The move comes despite Toyota's recall of 1.75 million cars in October. The recall was over various issues such as faulty brakes and fuel component issues.

Toyota raised its profit forecast despite cutting its vehicle sales forecast to 9 million units from 9.05 million for the year. "While we expect a reduction in vehicle sales, we are raising our operating income forecast by 200bn yen to 2.7tn yen, factoring in the change in our foreign exchange rate assumption and the progress in our profit improvement activities, such as cost reduction efforts," said managing officer Takuo Sasaki in a statement.

The yen's decline against the US dollar, which saw it depreciate by nearly 15% last year, has helped exporters like Toyota, which exports about half the vehicles it makes in Japan. In Toyota's biggest market, the US, the carmaker outperformed Japanese rivals and saw the biggest gains in the April to December period compared with other regions of the world.

In related  Toyota news, a U.S. jury on Tuesday ordered Toyota Motor Corp to pay nearly $11 million after finding that an accelerator defect in a 1996 Camry was at fault for a 2006 fatal car crash in Minnesota, Reuters writes. Following a three-week trial, jurors in Minnesota federal court deliberated for four days before finding Toyota 60 percent liable for the crash, according to plaintiffs’ lawyers.

Koua Fong Lee, the Camry’s driver, was found 40 percent responsible, according to lawyers. The plaintiffs said that the crash was caused by a defect in the Camry’s accelerator that caused it to become stuck, and the brakes failed to work. Toyota denied that the car was at fault, and said the driver had been negligent.

A spokeswoman for Toyota, Amanda Rice, said it was weighing its legal options. The car in the accident was not covered by Toyota's recall of more than 10 million vehicles between 2009 and 2010 over acceleration issues.

The Minnesota trial stemmed from a lawsuit filed on behalf of passengers injured or killed in a 2006 crash in St. Paul, Minnesota. Lee, who later joined the suit, said he was driving his 1996 Toyota Camry when it inexplicably began to accelerate as he approached other vehicles stopped at an intersection, according to court filings.