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A Toyota vehicle sits on a sales lot.
Brandon Bell/Getty Images
Move over Tesla—
Toyota Motor
is the most profitable automaker once again. The change, revealed in Toyota earnings, shows how competitive the electric-vehicle market is getting, and what Tesla is doing to expand sales rapidly.
Tuesday, Toyota (ticker: TM) reported earnings for the quarter that ended June 30, its first quarter of fiscal 2024. Adjusted earnings per share of 39 cents met Wall Street estimates, according to FactSet. Sales came in at about $74 billion, topping the consensus estimate of about $69 billion.
The results were good enough for Toyota investors. Shares rose 2.5% in overseas trading. Toyota’s U.S.-listed American depositary receipts, or ADRs, are up about 1.8% in early trading. The
S&P 500
is off 0.3%. The
Dow Jones Industrial Average
is up 0.1%.
Toyota’s sales volumes in the quarter came in at 2.3 million units, up from two million units a year ago. What’s more, operating profit margins came in at about 10.6%, up from 6.8% a year ago. It was the first time Toyota’s margin exceeded 10% since the final calendar quarter of 2021.
That’s a sign that supply-chain problems that have plagued the global auto industry for years are easing. A lack of parts, including, semiconductors constrained production and added cost for the entire industry.
Toyota’s margin also exceeded the 9.6% operating profit margin posted by Tesla in the second quarter of 2023. It was the first time Toyota has beaten Tesla on that metric since the second calendar quarter of 2021.
Tesla implemented significant price cuts at the beginning of 2023. The move preserved Telsa’s EV market share amid rising competition, but cuts ate into profits, too. The cost to purchase traditional, gasoline-powered new cars is still at, or near record levels. Pricing is still helping profits at the likes of Toyota and its peers.
One measure of increased competition: More than 30 EV models sold more than 1,000 units in the U.S. in the second quarter of 2023. A year ago, the number was closer to 20.
Tesla and Toyota are two very different companies, but they are the world’s most valuable auto makers. Tesla’s market capitalization is about $840 billion while Toyota’s is about $270 billion.
One reason for the difference is Tesla only sells EVs, which are growing rapidly and taking share from traditional vehicles.
Toyota grew battery-electric vehicle sales 623% year over year. Impressive, but Toyota still doesn’t sell many. The company sold 29,000 BEVs in the quarter, or about 1.3% of its total. Tesla is the world’s biggest seller of BEVs. It sold about 466,000 in the comparable quarter, a record for the company and up about 83% year over year.
Tesla stock is down 1.8% in early trading. The
Nasdaq Composite
is off 0.8%, but maybe Toyota’s win has something to do with Tesla’s drop too.
Write to Al Root at [email protected]
Source: https://www.barrons.com/articles/toyota-earnings-tesla-stock-df22231b?siteid=yhoof2&yptr=yahoo