Toyota’s key automotive component suppliers have recently adjusted their financial outlook for the fiscal year ending in March, as revealed in their latest financial reports. Seven major companies linked to Toyota have revised their 2024 projections downward. Notably, Denso, Aisin, Toyota Industries, and JTEKT have posted notable reductions in their net profit forecasts—by 16.8%, 23.1%, 5.8%, and a striking 42.9% respectively—falling short of initial expectations.
This shift in profit expectations is primarily due to multiple challenges. Among them are typhoon-related damages, production halts due to fraudulent inspection practices in Japan, and, perhaps most importantly, sluggish new car sales within the Chinese market. Denso has particularly pointed out that weak sales in China may be a persistent issue, prompting their strategy to heavily invest in emerging fields such as autonomous driving and electrification. This investment is paired with a simultaneous consolidation and downsizing of traditional business sectors.
With Toyota Motor’s reduced production volumes and lowered sales forecasts in both China and wider Asian markets, suppliers like Denso face significant hurdles. Although there is steady demand for hybrid electric vehicles (HEVs) from renowned Japanese manufacturers, this demand isn’t enough to counterbalance declining sales in crucial markets such as China and Japan.
Japanese automakers, including Toyota, are anticipated to produce around 11.876 million vehicles globally from April to September 2024. This projection indicates a 6% drop compared to the previous year, marking the first decline since 2020’s pandemic-induced disruption, reminiscent of the production challenges faced in 2022 due to supply chain issues and chip shortages.
Furthermore, Japanese car manufacturers are facing slow progress in the electric vehicle (EV) sales arena, while global production has seemingly hit a plateau. The increasing competition from Chinese automakers is forcing Japanese companies to scale back production, a trend likely to affect these component suppliers. In a broader context, American car companies such as Ford, General Motors, and Stellantis are similarly struggling with sluggish vehicle sales.
