Honda and Toyota post record profits, but see tougher times ahead

Honda is sparing no expense in its move to electric vehicles, like the 2024 Prologue shown here. Picture: Supplied.

Honda is sparing no expense in its move to electric vehicles, like the 2024 Prologue shown here. Picture: Supplied.

Published May 13, 2024


Japanese auto giant Honda on Friday logged a record annual profit thanks to improving global vehicle sales, but issued a cautious outlook for the current fiscal year.

The company said net profit for the year to March soared 70 percent to $7.1 billion (R131 billion), up 20.8 percent from the previous year.

Similarly, Toyota reported record annual net profit of more than $30 billion (R552 billion) while warning that the current year would be less spectacular.

Honda has made big outlays as it aggressively pursues a target set three years ago of achieving 100 percent electric vehicle sales by 2040.

Its 2023-24 results come two weeks after it announced the largest automotive investment in Canada's history for a new US$11 billion (R240bn) EV battery and vehicle assembly plant.

The company already has a partnership in electric vehicles with Sony, and is exploring collaboration with arch-rival Nissan as they face a "once-in-a-century" upheaval in the car industry - a move analysts say is aimed at catching up with Chinese EV competitors.

Honda said global vehicle sales were up, thanks largely to its vehicles' popularity in the United States. Sales volume was down in China, however, while its motorcycle division's robust sales in India and Brazil offset falls in Vietnam.

Price increases and the weak yen boosted profits overall, Honda said.

For the year to March 2025, the company expects net profit to fall 9.7 percent, as rising costs and changes to forex rates may put pressure on company results going forward, it said.

Vehicle sales in the United States and the Japanese markets are expected to grow, Honda said, but it predicted sales in the rest of Asia would ease.

Nissan on Thursday said it had nearly doubled its 2023-24 net profit, weathering challenges in the Chinese market, but forecast a dip of around 10 percent for 2024-25.

Toyota boosted by hybrid sales

Toyota’s record annual net profit was also helped by a weak yen and strong hybrid vehicle sales.

"Under the banner of 'carbon is the enemy', Toyota has done what it can to achieve carbon neutrality and make hybrid cars more prevalent," said chief financial officer Yoichi Miyazaki.

"Since the debut of the Prius model, that effort has gradually paid off, creating the perception even in the American market that hybrids are the main player," Miyazaki told reporters.

Latest Toyota Prius. Picture: Supplied.

For this year it expects net profit to fall by 27.8 percent, because of investments in "growth areas" such as electric and hydrogen cars, as well as in "human capital". However sales are expected to rise by 2.0 percent.

"We have to accept that there are certain areas where we're significantly behind China ... But as a Japanese company fighting in the auto industry, we know we cannot let this lead widen further. We're going to think about how to pull off a game-changer," Miyazaki said.

Toyota last month said it sold 11.1 million vehicles across all brands in the 2023-24 fiscal year, up five percent and the first time they have exceeded 10 million.

A big factor was a 31-percent jump to 3.7 million in sales of hybrid vehicles - combining internal combustion engines and batteries - like the Corolla and the RAV4.

Sales of purely electric car sales were a much more modest 116,500.

Toyota pioneered hybrid cars with its popular Prius model, but it and other Japanese carmakers have been criticised for being slow to embrace purely battery-powered vehicles.

But its strategy appears finally to be paying off with signs that consumers are going cold on pure EVs because of high prices and worries about reliability, range and a lack of charging points.

In 2023, China overtook Japan as the world's biggest vehicle exporter, a change fuelled by the country's dominance in electric cars.

Toyota is however still aiming to sell 1.5 million EVs annually by 2026 and 3.5 million by 2030.

It is also hoping to mass-produce solid-state batteries, a potentially hugely important technological breakthrough that could mean faster charging times and greater range.