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Analyzing Recent Trends in Toyota’s Revenue

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Toyota Motor Corporation

Previously in this series, we looked at Toyota’s (TM) marketing strategy. Overall, the company’s marketing approach is similar to the marketing approach of other automakers (VCR) such as General Motors (GM), Ford (F), and Fiat Chrysler (FCAU). Now, let’s look at the recent trends in Toyota’s revenue.

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Toyota’s revenue

According to a report published by Forbes in May 2015, Toyota was the eighth-largest company in the world by revenue. The company is not directly listed in the US, although its ADR (American depositary receipt) is traded on the NYSE.

In fiscal 2016 (April 1, 2015–March 31, 2016), Toyota reported strong revenues of 28.4 trillion Japanese yen, which is 3.4% higher than its revenues of 27.2 trillion yen in fiscal 2015.

As a Japanese automaker, Toyota reports its earnings in yen. As a result, investors should pay attention to the company’s yen revenue to better understand the trends. This is because the fluctuation in foreign exchange rates of the US dollar against the Japanese yen at different points of time could lead to confusion if we look at Toyota’s revenue in dollar terms.

What is driving Toyota’s revenue?

As you can see in the chart above, since fiscal 2010, Toyota’s revenues have grown by 50%. While the company’s revenue from North America has increased by ~90% during this period, its revenue from Japan has witnessed stagnation with a slim 9% increase. Also, the trend in Toyota’s revenue from Asia shows optimism with a 63% increase since fiscal 2010.

The positive growth in North America was primarily driven by a sharp recovery in auto demand in the US after the 2008–2009 crisis. In Asia, positive growth in China’s and India’s auto markets helped the company to increase its revenue from the region.

Toyota’s North American revenue and profitability also benefited from the recent weakness in the Japanese yen against the US dollar. We’ll discuss this in the next part of this series.

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