What's going on?
Toyota announced on Wednesday that it had sold a near-record number of cars in its past year, but the carmaker will need those acorns of success to get through the bitter winter ahead.
What does this mean?
Toyota’s sales have gone through the automatic roof, with the company selling a near-record 9.5 million cars in the past financial year. It posted the highest-ever operating profit for a Japanese company too, thanks to a rival-beating formula of cost-cutting measures. But the past is the past: the carmaker now reckons raw material prices will double this year from last, when they were already at an all-time high. That, the carmaker said, will drag its profit down by 20%, even as it expects to sell 13% more cars and continue to benefit from a weaker yen. And while Toyota is known for giving conservative forecasts, this one was outright Republican: investors sent its stock down 6%.
Why should I care?
The bigger picture: Everyone’s agreed, then.
Toyota’s acute pessimism is mirrored by industry analysts, who have been warning about the risks to carmakers in the next 12 months. Market research firm IHS Markit has downgraded its forecast for global vehicle production twice in as many months, based on things like the war in Europe, the fallout from Chinese lockdowns, and the languishing microchip recovery. Jefferies’ analysts, meanwhile, argue that still-high inflation and an impending slowdown in global economic growth might put would-be car buyers off altogether.
Zooming out: Shut up and don’t drive.
There are already signs that China’s drivers are stepping away: data out this week showed that car sales in the world’s biggest market fell 36% last month from the same time in 2021 (tweet this). That’ll happen when you lock down carmaking hubs like Shanghai, bringing production to a halt and keeping buyers out of showrooms…