In the second quarter of 2021, Toyota’s financial health has surpassed its rivals in the automobile industry. Despite the ongoing pandemic and supply chain constraints, Toyota managed to report record profits in the quarter.
Toyota’s operating profit for the second quarter was ¥997.5bn ($9.1bn), up by 614% in comparison to the same period last year. On the other hand, Honda’s operating profit for the second quarter was ¥243.3bn ($2.2bn), up by 28% year on year, and Nissan reported an operating profit of ¥66.1bn ($605m), against its losses in the same period last year. However, Toyota’s profits have outdone Honda and Nissan’s profits combined.
The reason behind Toyota’s success is associated with its diverse product portfolio, efficient cost management, and focus on manufacturing globally demanded vehicles. Despite the setbacks faced by the automobile industry due to the shortage of semiconductors, Toyota managed to avoid the production halt and reduced its production of low-selling models, enabling it to meet demand for the high-selling models.
Moreover, Toyota’s approach to electrification is pragmatic in comparison to its rivals. While Honda and Nissan aim to achieve full electrification, Toyota aims to introduce more hybrid models and is currently working on developing solid-state batteries. Such batteries promise increased range, faster charging time, and no flammable liquid electrolyte. Toyota expects to launch a vehicle equipped with solid-state batteries by 2025.
Toyota’s strategy of diversification has also been a key factor responsible for its financial health. While their rivals have relied on the sale of sports and luxury cars, Toyota has focused on manufacturing economy vehicles, which are high in demand globally. Toyota’s renowned “Lean Manufacturing” approach enables it to produce low-cost vehicles without compromising on the quality of the product.
In conclusion, Toyota’s financial health has outshined its rivals in the second quarter of 2021, primarily due to its diverse product portfolio, cost-efficient production, and global demand for its vehicles. Toyota’s approach to electrification is slow but pragmatic, which is expected to produce a favorable outcome in the future. Toyota’s strategy of diversification has also been successful in balancing its profits while ensuring quality and value for money for its customers.