Toyota hones focus on cost cuts

Toyota is sharpening its focus on keeping costs in check and fuelling demand in China to prepare for challenges in a U.S. market potentially hit by a trade war.

The Japanese car giant reported firstquarter profits that topped analysts’ estimates, helped by expense reductions and rising sales in Asia. While keeping its full-year revenue and earnings forecast unchanged, Toyota slashed its prediction for North American sales by 50,000 cars.

Toyota joins other carmakers in preparing for challenges as sedan sales cool in the U.S. and the country’s trade war with China threatens to boost prices and weigh on demand. The company cut costs by 60 billion yen (US$540 million) in the first quarter and said it’ll continue to push for savings across its regions.

“We need to have a sharp focus on cost savings, even if it’s saving just one pencil,” Senior Managing Officer Masayoshi Shirayanagi said at an earnings briefing Friday in Tokyo. “We’re still only halfway through our cost cutting efforts.”

Shares of Toyota declined 0.9 per cent to 7,220 yen in Tokyo. The stock is little changed this year.

The Trump administration’s steel and aluminum tariffs lowered Toyota’s fullyear profit outlook by 10 billion yen, Shirayanagi said. Toyota hasn’t included the effect of any additional U.S. tariffs to its profit and vehicle sales outlook, but the impact would be very big, he said.

The U.S. has imposed new tariffs on goods from China, and the commerce department is probing whether imports of passenger vehicles imperil national security. If the U.S. levies a 25 per cent tariff on cars and parts from abroad, the cost of an imported vehicle would go up by $6,000, Shirayanagi said. The cost of a locallyproduced Tundra would rise by $2,800, and a locally-made Sienna by $3,000, he said.