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· Posted on
February 21, 2024

Toyota has a smooth ride thanks to the weaker Yen and higher sales

Toyota's sales improved across all major regions and it did nicely from a plunge in the Japanese yen in October last year.

What's the key learning?

  • Despite global car makers having been squeezed due to a major semiconductor shortage and rising costs, Toyota's sales improved with the strongest growth of 16%.
  • Toyota also did nicely when the Japanese currency hit a 32-year low in October.
  • For global companies, a weaker home currency can boost results when profits from abroad are brought home.

👉 Background: Toyota is the Japanese multinational car maker. It was founded in 1937 and produces about 10 million vehicles per year.

👉 What happened: Recently, global car makers have been squeezed. We're talking a major semiconductor shortage and rising costs. But despite these headwinds, Toyota sales improved across all major regions. North America, its biggest market, showing the strongest growth of 16%.

👉 What else: On top of sales, Toyota did nicely from a plunge in the Japanese yen in October last year. In good news for Toyota, the Japanese currency hit a 32-year low in October.

What's the key learning?

💡 For global companies, a weaker home currency can boost results when profits from abroad are brought home. While Toyota's sales increased, they also achieved positive results due to a weak yen.

💡For Toyota, their foreign, non-Japan sales - which accounts for around 85% of all sales - are converted from other currencies into Japan’s weaker currency.

💡 But this conversion phenomenon is much less helpful than it used to be for Japanese companies like Toyota because more and more of a quarter of Japanese manufacturing is now based overseas.

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