By the looks of it, Toyota Motor s holding steady, even as other carmakers flail.
But some caution is warranted.
Toyota has consistently outperformed its rivals over the last year as the industry struggles with everything from technology adoption to tariffs. Its shares are down just 5 per cent in the past year, compared with its peers’ average of almost 10 per cent. Some have slumped more than 20 per cent.
On Wednesday, Toyota announced that its automotive division’s operating income rose 1.4 per cent for the 2019 fiscal year, mainly thanks to cost cuts. Still, in an earnings press conference, executives said that the company didn't reach its targets for such reductions this year, and what was accomplished didn’t offset the costs of improving their products. That means the company will continue to find new ways to lower spending – even if that means changing its choice of stationery and pencils, they said. Toyota raised capital and R&D expenditure forecasts for the next fiscal year.
Toyota has maintained a fine balance. Investors are encouraged by its tight-fistedness; yet the company has maintained its expenses at around 80 per cent of net sales for the better part of the last decade, with no clear indication that they’ll fall further. Meanwhile, the costs of its products have risen steadily, albeit at a slower pace in recent quarters.
As conviction about the future of electric and autonomous cars wanes, investors are going back to basics: rewarding cost control and restructurings. Despite General Motors' dismal performance and dearth of future models, the stock is up 6 per cent over the past year – an auto outlier –after it announced big restructuring plans.
Toyota is by no means in as precarious a position as Nissan or others that have announced multibillion-dollar overhauls. Honda on Wednesday reported profits for the year fell and margins shrank, as it reined in and re-jigged car production. But spending is bound to rise and there are no obvious catalysts for future growth to offset them.
The company’s challenges are on full display in the US, where it’s pulling back on buyer incentives and battling Americans’ soft spot for gas guzzlers over bread-and-butter saloons. After dropping every month since November, Toyota’s sales in the US fell another 4.4 per cent, steeper than the overall market’s 1.7 per cent. With buyers flinching at higher prices and interest rates, Toyota may need to start dangling more sweeteners. Rising inventory levels and falling sales could be the catalyst, according to Brad Korner from Cox Automotive.
Competition in China, where the company is doubling down after its late entry to the market, is also rising. Over the past year, Toyota and its Japanese peers have gained some market share – and executives said sales there will provide a boost. But the world’s largest car market is going through a step change. As it matures and slows, foreign luxury car makers have been offering incentives and lowering prices. If they fall too close to Toyota’s range, that’ll be bad news.
There are signs this is already happening: In China, an Audi A3 is now in the same price range as a Toyota Camry, and Volkswagen’s Tiguan could cost as much as an Audi Q2L, according to Morgan Stanley. That means either prices are being lowered or the company is offering other benefits, like zero-interest loans or replacement subsidies, the analysts note.
Then there are the costs of keeping up: with its joint-venture partner Guangzhou Automobile, Toyota is investing $1.64 billion to expand new-energy car capacity. It has set up a JV with Panasonic to produce batteries.
All of these are good endeavors, but returns aren’t imminent. As Toyota flings money at ventures with Uber Technologies Inc., it seems outlays will outweigh growth drivers for a while.
At its press conference, Toyota executives conceded that they needed to find new ways to cut costs. Even if optimistic investors aren’t banging the table for growth drivers just yet, it may be prudent for the company to have a couple of ideas up its sleeve.
Bloomberg
Europe’s rearming plan
- Suspend strict budget rules to allow member countries to step up defence spending
- Create new "instrument" providing €150 billion of loans to member countries for defence investment
- Use the existing EU budget to direct more funds towards defence-related investment
- Engage the bloc's European Investment Bank to drop limits on lending to defence firms
- Create a savings and investments union to help companies access capital
Key Points
- Protests against President Omar Al Bashir enter their sixth day
- Reports of President Bashir's resignation and arrests of senior government officials
The Perfect Couple
Starring: Nicole Kidman, Liev Schreiber, Jack Reynor
Creator: Jenna Lamia
Rating: 3/5
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
Ponti
Sharlene Teo, Pan Macmillan
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Key recommendations
- Fewer criminals put behind bars and more to serve sentences in the community, with short sentences scrapped and many inmates released earlier.
- Greater use of curfews and exclusion zones to deliver tougher supervision than ever on criminals.
- Explore wider powers for judges to punish offenders by blocking them from attending football matches, banning them from driving or travelling abroad through an expansion of ‘ancillary orders’.
- More Intensive Supervision Courts to tackle the root causes of crime such as alcohol and drug abuse – forcing repeat offenders to take part in tough treatment programmes or face prison.
Tightening the screw on rogue recruiters
The UAE overhauled the procedure to recruit housemaids and domestic workers with a law in 2017 to protect low-income labour from being exploited.
Only recruitment companies authorised by the government are permitted as part of Tadbeer, a network of labour ministry-regulated centres.
A contract must be drawn up for domestic workers, the wages and job offer clearly stating the nature of work.
The contract stating the wages, work entailed and accommodation must be sent to the employee in their home country before they depart for the UAE.
The contract will be signed by the employer and employee when the domestic worker arrives in the UAE.
Only recruitment agencies registered with the ministry can undertake recruitment and employment applications for domestic workers.
Penalties for illegal recruitment in the UAE include fines of up to Dh100,000 and imprisonment
But agents not authorised by the government sidestep the law by illegally getting women into the country on visit visas.
Golden Shoe top five (as of March 1):
Harry Kane, Tottenham, Premier League, 24 goals, 48 points
Edinson Cavani, PSG, Ligue 1, 24 goals, 48 points
Ciro Immobile, Lazio, Serie A, 23 goals, 46 points
Mohamed Salah, Liverpool, Premier League, 23 goals, 46 points
Lionel Messi, Barcelona, La Liga, 22 goals, 44 points
AndhaDhun
Director: Sriram Raghavan
Producer: Matchbox Pictures, Viacom18
Cast: Ayushmann Khurrana, Tabu, Radhika Apte, Anil Dhawan
Rating: 3.5/5
F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
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How to volunteer
The UAE volunteers campaign can be reached at www.volunteers.ae , or by calling 800-VOLAE (80086523), or emailing info@volunteers.ae.
MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
Company profile
Company name: Nestrom
Started: 2017
Co-founders: Yousef Wadi, Kanaan Manasrah and Shadi Shalabi
Based: Jordan
Sector: Technology
Initial investment: Close to $100,000
Investors: Propeller, 500 Startups, Wamda Capital, Agrimatico, Techstars and some angel investors
Zidane's managerial achievements
La Liga: 2016/17
Spanish Super Cup: 2017
Uefa Champions League: 2015/16, 2016/17, 2017/18
Uefa Super Cup: 2016, 2017
Fifa Club World Cup: 2016, 2017
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
Business Insights
- As per the document, there are six filing options, including choosing to report on a realisation basis and transitional rules for pre-tax period gains or losses.
- SMEs with revenue below Dh3 million per annum can opt for transitional relief until 2026, treating them as having no taxable income.
- Larger entities have specific provisions for asset and liability movements, business restructuring, and handling foreign permanent establishments.
The Breadwinner
Director: Nora Twomey
Starring: Saara Chaudry, Soma Chhaya, Laara Sadiq
Three stars
The specs
Engine: 4.0-litre V8 twin-turbocharged and three electric motors
Power: Combined output 920hp
Torque: 730Nm at 4,000-7,000rpm
Transmission: 8-speed dual-clutch automatic
Fuel consumption: 11.2L/100km
On sale: Now, deliveries expected later in 2025
Price: expected to start at Dh1,432,000
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COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
