Toyota Motor Corp., the world’s largest carmaker, is raising its full-year profit forecast as sales in Asia are growing more than expected and demand in the U.S. recovers following the recall of more than 8 million vehicles.
Toyota may post net income of $3.98 billion in the year ending in March, compared with an earlier smaller estimate, it said in a statement today. For the fiscal first quarter, the company swung close to 2 billion profit from a year-earlier loss.
The automaker raised its sales outlook for all regions except Europe amid a rebound in demand that prompted rival Honda Motor Co. to also lift its earnings forecast last week.
“Toyota is now at a point where they feel comfortable giving good news,” said Yuuki Sakurai, chief executive officer of Fukoku Capital Management in Tokyo. “The recall issue has settled down in the U.S. and China.”
Toyota’s first-quarter sales gained 36 percent in North America, its biggest market. While deliveries fell 3.2 percent in July, the North American market may improve from the third quarter, Toyota’s Senior Managing Director Takahiko Ijichi said today.
Toyota raised its global vehicle sales forecast to 7.38 million units for the year ending in March 2011 from an earlier estimate of 7.29 million.
The company left its forecast for the yen against the dollar unchanged at 90 yen, 5 percent weaker than the rate of 85.52 as of 9:29 am in London. A stronger yen, which traded near an eight-month high against the U.S. dollar today, may erode profit gains by reducing the repatriated value of overseas sales.
Toyota is posting profit gains after the global recession hammered earnings a year earlier and after the recalls that began late last year.
The automaker, which said in July it added 1,000 engineers to an expanded quality assessment group, is extending vehicle development time by about four weeks on average and is opening new regional offices in the U.S. and Canada to more quickly investigate customer complaints.
While Toyota’s U.S. sales dropped in July, industrywide sales increased 5.2 percent. Hyundai, which introduced a revamped Sonata sedan in February, posted a 19 percent sales gain in the nation, and U.S.-based carmakers reported a combined sales increase of 5.5 percent for the month.
Toyota’s average incentives surged 44 percent to $2,235 per vehicle in the first quarter from a year earlier, the highest amount for the period since at least 2001, according to auto industry researcher Edmunds.com in Santa Monica, California.
“Recovery in North America is less than stellar,” said Naoki Fujiwara, a fund manager who helps oversee about $6 billion at Shinkin Asset Management Co. in Tokyo. “I’m worried that Toyota’s sales incentives in the U.S. are ballooning.”
The company has been cutting back on incentive spending in the U.S. since July and will continue to do so through the fiscal third quarter, Toyota’s Ijichi said today.