Toyota's major automotive component suppliers have revised their financial guidance downward for the fiscal year ending in March, according to their latest financial results.
According to Nikkei and Reuters, seven major Toyota-affiliated component companies have revised their 2024 fiscal year projections downward. Denso has lowered its net profit forecast by 16.8%, Aisin by 23.1%, Toyota Industries by 5.8%, and JTEKT by 42.9%, all below initial expectations.
The decline in profits among these suppliers is attributed to several factors, including typhoon damage, production halts caused by fraudulent vehicle inspection practices in Japan, and most significantly, the sluggish new car sales in the Chinese market.
Denso highlighted that the weak sales in China could persist in the long term. The company has announced plans to invest proactively in growth areas like autonomous driving and electrification while consolidating and downsizing its traditional business operations, pursuing both strategies concurrently.
Lower production volumes from Toyota Motor combined with reduced sales expectations in China and Asia are creating headwinds for Denso's component sales. Although demand for hybrid electric vehicles (HEVs), a key strength of Japanese manufacturers like Toyota and Honda, remains stable, it fails to offset the declines in sales in key markets like China and Japan.
Japanese automakers, including Toyota Motor, are expected to produce around 11.876 million vehicles globally between April and September 2024, reflecting a 6% year-over-year decline. This marks the first drop since the pandemic began in 2020, bringing production levels back to those seen in 2022 when supply chain disruptions and chip shortages were widespread.
Japanese carmakers are progressing slowly in electric vehicle (EV) sales, and global production appears to have reached a bottleneck. With heightened competition from Chinese manufacturers, Japanese firms are scaling back production, a trend that will likely impact automotive component suppliers in Japan. Meanwhile, American automakers, including Ford Motor, General Motors, and Stellantis, are also facing sluggish vehicle sales.
