Toyota Motor Corp (NYSE:TM) announced a record-high level of profits for the 9-month period ended 31st December 2015. This announcement comes on the back of good sales growth in the regions of North America and China. In China, operating income is being said to have received a considerable boost as a result of an increase in production efficiency levels within the region. Furthermore, operating income also increased due to favorable exchange rates. In addition, increased sales in North America were attributable to cheaper gasoline prices brought about by the fall in the price of crude oil.
However, it has not been all ‘plain sailing’ for the automotive company, which has also encountered numerous challenges over the past year. Most notably, for instance, the company had no choice but to halt production in Japan because of an explosion in one of its steel factories. The company produces an estimated 14,000 vehicles on a daily basis. Taking this into context, the abrupt closure of a steel factory that manufactures crucial components significantly hampered sales targets as a consequence. The company was also drawn into an airbag recall crisis, in which approximately 1.2 million vehicles of certain models were expected to be voluntarily recalled. The said vehicles, manufactured between March 2003 and 2007 were to undergo inspections for air leaks and possible airbag inflator replacement.
The month of January 2016 was a tough period for the sale of cars, justified by the fact that other companies such as Ford Motor (NYSE:F) and Volkswagen (OTC:VLKAY) also experienced sales difficulties, albeit for different reasons. For Toyota, overall sales in the United States fell by 4.7%, partly because their product line struggled to perform. This is best exemplified by the fact that the Toyota Camry, which is the company’s bestselling vehicle in the United States, could only conjure up a 0.3% increase in sales to 26,848 units. This was not enough to compensate for the decline in sales of the other vehicles in the product line, such as the Toyota Corolla, which dropped by more than 18% to 22,362 units. Overall, the company’s car division reported an 11% drop in sales.
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