Exchange rate helps steer Toyota toward banner year

TOKYO— Buoyed by a growing U.S. car market and the most favourable exchange rates in decades, Toyota Motor is closing in on its most profitable year ever, the automaker’s latest earnings report suggested Wednesday.

The Japanese company, which is the largest-volume car producer in the world by a narrow margin, retains a larger lead when it comes to profit. It has led the global auto industry for as long as many car owners have been driving, excepting an ugly stumble during the global financial crisis several years ago.

Through the third quarter of its business year, which ends in March, Toyota earned a net profit of 1.727 trillion yen (roughly $18.5 billion Canadian) it said in the report. That is 13.2 per cent more than in the same nine-month period a year earlier and enough for the company to raise its net profit forecast for the year to 2.13 trillion yen, from 2 trillion yen.

For the quarter ended in December, Toyota’s net profit rose 14 per cent to 600 billion yen, a bigger gain than analysts had forecast. Industry experts surveyed by Bloomberg had expected, on average, a profit of 549 billion yen.

Toyota is grappling with a number of serious challenges. Its home market, Japan, is shrinking, and it lags other large carmakers in China, where more vehicles are now sold than in any other country. That is one reason it is expected to lose its production crown in the near future to Volkswagen.

For now, Toyota is enjoying a golden moment.

A big reason is the yen: Its value in foreign exchange markets has plummeted as Japan’s central bank has furiously created money in an effort to fight deflation and stimulate the economy. That has allowed Toyota to earn more money on each vehicle it sells outside Japan.