Toyota reports a 39 percent jump in profit

updated 1:55 p.m. ET Aug. 4, 2006

TOKYO - Toyota appeared to be on track to overtake General Motors as the world's No. 1 automaker as it boosted vehicles sales around the world and reported a 39 percent jump in profit in the first fiscal quarter Friday.

The Japanese automaker's reputation for delivering fuel efficiency was proving a boon at a time when drivers are balking at soaring gas prices — at about $3 per gallon at U.S. stations — analysts said.

Toyota Motor Corp., the world's second biggest automaker, is among a clutch of Japanese vehicle companies reporting robust results lately in contrast to the plight of the U.S. automakers.

"Everything is going well for Toyota, especially in North American sales," said Koji Endo, auto analyst at Credit Suisse First Boston Securities in Tokyo.

Endo said that in addition to robust sales of Toyota's smaller models such as the Corolla, the company's light trucks and Lexus luxury models — which tend to produce healthier profit margins per vehicle — have also been doing well, boosted by the perception that they're more fuel efficient than rival offerings.

Toyota's profit in April-June totaled $3.2 billion, as a weaker yen also helped earnings, adding $871 million to operating profit.

Quarterly sales surged 13 percent to $49 billion, according to the manufacturer, based in Toyota city in central Japan.

Some analysts believe Toyota will overtake GM as the world's No. 1 automaker in a few years if the current pace continues.

In July, Toyota for the first time beat Ford Motor Co. in U.S. vehicle market share, outselling Ford to be No. 2 after GM, although Ford's year-to-date sales are still ahead of Toyota's.

To keep its ambitions for growth going, Toyota is increasing production in various regions, including a plant in Texas that begins production this year, as well as in China, where Toyota recently rolled out its first Camry. Production expansions are also in the works in Canada, Thailand, Mexico and Russia.

Toyota sold 2.09 million vehicles around the world in the latest quarter, up from 1.95 million the same period a year earlier. The automaker boosted sales especially in North America, where it sold 747,300 vehicles, up more than 16 percent from 641,200 the first quarter of last year.

General Motors continues to outsell Toyota, selling 2.4 million vehicles globally in the latest quarter.

Toyota kept unchanged its forecast for the full fiscal year ending March 2007, at $11.4 billionprofit on $194 billion in sales. It also maintained its vehicle sales forecast for fiscal 2006 at 8.45 million vehicles, up from 7.97 million Toyotas sold in the fiscal year ended March 31.

In quarterly revenue, Toyota reported a 14 percent increase in Japan, 19 percent rise in North America and 24 percent surge in Europe, while revenue inched down 4 percent in Asia but leaped 25 percent for other regions during the three months.

MORE FROM BUSINESS

Business Section Front

Blacks hard-hit by loss of middle-class jobs Answer Desk: Repairing consumer credit  NYT: With Iraq foothold, oil giants eye future Dubai debt plan fails to soothe Gulf markets GE, Vivendi reportedly reach deal on NBC Stocks close higher, extend month’s big gains Fifty firms that are expert at Facebook Black workers' crisis may linger after upturn Cutting back is hard, cutting gift list is harder ‘Cyber Monday’ sales up 20 percent over '08   Business Section Front   Add Business headlines to your news reader: