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Saturday, Aug. 5, 2006

Toyota shrugs off safety woes; logs record profit

Staff writer

Toyota Motor Corp., unscathed by an investigation over its failure to promptly recall faulty vehicles, announced record group sales and profits for the April-June quarter Friday, thanks to strong sales in North America and Europe.

News photo
Teiji Tachibana, senior managing director of Toyota Motor Corp., faces reporters Friday in Tokyo to announce the firm's quarterly financial results, including record profit. KYODO PHOTO

Toyota reported its group net profit jumped 39.2 percent from the previous year to 371.5 billion yen, while sales rose 13.2 percent to 5.64 trillion yen.

Japan's biggest automaker also posted a record operating profit of 512.4 billion yen, up 26.5 percent, while its pretax profit climbed 31.5 percent to 554.6 billion yen.

Sales in North America increased from 641,000 vehicles a year ago to 747,000 vehicles, due to brisk sales of new models and compact cars.

But its operating profit margin -- operating profit divided by sales -- in North America declined slightly as customers shifted to lower-margin compacts.

Toyota sold 308,000 vehicles in Europe for the quarter, up from 256,000 vehicles last year, thanks to strong sales of its new Yaris and RAV4 models.

Despite the strong figures, Toyota said it will not change its forecast for fiscal 2006, saying the figures for the first quarter are in line with its estimates.

"Sales in Asia may fall short of our forecast, but sales in North America are likely to be better than expected," said Takeshi Suzuki, Toyota's senior managing director. "As a result, we expect to achieve our (initial) forecast."

The announcement came as Toyota said last month it will recall 268,000 vehicles in Japan over faulty engines, causing worries among customers about the safety of Toyota cars.

The latest recall follows one in which Toyota was forced to recall 330,000 Hilux Surf SUVs with faulty steering in October 2004, two months after a driver lost control and collided head-on with another car in Kumamoto Prefecture. Five people were injured in the accident.

Kumamoto Prefectural Police sent the case to prosecutors on July 11 on suspicion that three Toyota officials failed to recall the model, despite learning of the defect in the relay rod of the vehicles' steering system.

But Suzuki said the company does not plan to set aside additional funds to deal with safety issues.

"We have included the (safety) costs in the 1.5 trillion yen investment we plan to make in this fiscal year," Suzuki told a news conference.

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The Japan Times

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