Toyota Raises Profit Forecast as U.S. Camry, RAV4 Sales Jump

Toyota Motor Corp. raised its profit forecast for the third time this fiscal year helped by higher demand for the updated Camry sedan and RAV4 sport utility vehicle in the U.S., its biggest market.

Asia’s biggest automaker sees operating profit rising to 2.2 trillion yen ($20 billion) in the year ending in March, from 2 trillion yen forecast in November. That beat the 2.1 trillion-yen average analyst estimate. Toyota also increased its vehicle sales forecast across the group to 10.3 million units for the year ending in March from a November estimate of 10.25 million.

America’s love for SUVs has reverberated through the earnings of Toyota and Honda Motor Co., which last week raised its profit forecast. Even while boosting the sales of the RAV4 SUV, Toyota also retained its status as the maker of America’s best-selling car last year with the redesigned Camry. The Japanese carmaker captured 14.5 percent of the U.S. market in January, second only to General Motors Co.’s 17.2 percent.

Toyota raised its forecast for North American sales this fiscal year to 2.81 million vehicles from 2.79 million. That more than made up for slight downward revisions for sales in Japan and Europe.

Read more about Toyota’s challenges in China here

Toyota projects research and development spending at a record 1.06 trillion yen this fiscal year, even as it cuts costs in other areas. President Akio Toyoda is pushing the company deeper into new electrified powertrains and artificial intelligence, segments he says the automaker needs to lead. In December, Toyota announced plans to have at least 10 battery-electric vehicles in its lineup by the early 2020s, from zero now.

Like its rivals in the U.S., Toyota’s incentive spending is rising amid increasingly fierce competition. However its average outlay per vehicle of $2,585 in January was less than half the $5,193 that General Motors Co. spent and far below Ford’s $4,182, according to research firm Autodata Corp.

And Toyota had a strong start to 2018, racking up a 14.5 percent share of the market, second only to GM’s 17.2 and outpacing Ford’s 13.9 percent, Autodata said. Over 2017, Toyota was No. 3 with 14.1 percent share.

At the same time, to post those January numbers Toyota relied more on deliveries to rental-car companies, according to Cox Automotive. Fleet sales, which tend to be discounted, surged 69 percent from a year earlier, the researcher said. Rental cars tend to end up in the used-vehicle market, which then compete against new model sales.