Toyota Profit Battered by U.S. Shift, Exchange Rate

Toyota Profit Battered by U.S. Shift, Exchange Rate

As expected, Toyota Motor Corp. reported a sharp reduction in profit for its first quarter, absorbing a 28.1-percent plunge in net income, the company reported today.

Toyota said appreciation of the yen vs. the U.S. dollar accounted for most of the decrease of ¥262.9 billion in operating income, but added that price increases for raw materials also contributed.

The losses come despite the fact Toyota sold 2.19 million vehicles in first-quarter 2008, a slight increase of 24,000 vehicles compared with last year.

Toyota's North American sales were down by 33,000 units in the first quarter, but said it nonetheless recorded a record-high 17.4-percent market share. The highest-ever market share figure did not translate to higher profits, however.

"Decrease in sales volume, the shift of product mix to compact cars, increase in sales expenses such as incentives and increase in reserves for bad debts, resulted in declining profits," the company said in a release, adding, "Toyota will take swift actions in accordance with market changes by increasing the supply of models in high demand and launching new models."

In the U.S., the company also said it is bracing for a sharp decline in the residual value of pickups and SUVs being returned by lease customers.

Bill Visnic:  is an AutoObserver Senior Editor. Follow @AutoObserver on Twitter