Kon put the blame on the coronavirus pandemic. In Toyota’s fiscal fourth quarter, the virus outbreak chopped 160 billion yen ($1.48 billion) off operating profit and 380 billion yen ($3.52 billion) off revenue. He said April should be the bottom, as market conditions gradually improve in the U.S., Europe, China and another markets.
But a return to normal business, in the U.S. at least, could take the rest of 2020, Kon said.
“Our assumption is that April will be the bottom, and little by little we will recover,” Kon said of operations in the key North American market. “By the end of the year and the beginning of the new year, we believe we will be in normal operation mode.”
Kon said the company will delay some new model plans because of the pandemic slowdown.
“When we look at future, new model plans, there there will be some projects that will be delayed,” Kon said. “There will be some delays in development activities. And for new model launches we are going to take this time as an opportunity to review what we have done in the past as business as usual. So for our full model changes, minor changes and small-change projects, we are doing a total review of whether we should do it or not.”
Kon declined details on what changes were in store but said they would not be significant.
Despite the deteriorating environment, President Akio Toyoda said the company had no plans to scale back on its big investments into next-generation technologies, such as the Woven City, town of tomorrow it is building in the foothills of Mount Fuji. Toyota will keep its R&D investment stable at 1.1 trillion yen ($10.2 billion). As a percentage of revenue, R&D outlays will increase to 4.6 percent, from 3.7 percent.
“Recently we have planted the seeds of a new Toyota,” Toyoda said. “And for this kind of new projects, we will continue pushing the accelerator pedal.”
Toyota’s results were hurt by falling sales and soaring costs for suspended operations. The company halted production at plants around the world in response to government regulations meant to limit transmission of the coronavirus. And even in areas with fewer restrictions, Toyota scaled back output in line with falling demand to forestall a huge pile up of inventory.
May will be a big month for Toyota bringing much of its global operations back online, even if it is with partial production. Toyota targeted a gradual ramp up of North American plants from May 11, and its plant France returned to work in early May. Toyota’s factories in China, the epicenter of the global coronavirus outbreak, resumed normal operation from March 30.
Plants in other European countries are also expected to resume in May, along with other factories across Latin America and Asia. But some plants in Japan still operate on a staggered schedule, while the restarts of some operations in India, Russia, Malaysia are still on hold.
