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Despite its past successes, Toyota anticipates a 20% decline in profit margins for the first quarter of 2017, as reported by Reuters. Facing challenges in the North American market, the automaker has been increasingly offering incentives to stabilize sales, which has led to a considerable drop in vehicle prices and profits. This decrease may pose a challenge to Toyota’s investments in driverless technologies and artificial intelligence, areas where the company has recently concentrated its efforts.
This marks the second consecutive year of decline for Toyota, which lost its title of “World’s Largest Automaker” to Volkswagen last year by a margin of just 10,000 vehicles. The company experienced a notable 30% drop in sales last year, largely due to a stronger yen, which significantly impacted their financial performance. The disparity continues to grow in 2016, prompting Toyota to assert that it will need to prioritize its investments to maintain profitability for the remainder of the year. Recent figures indicate that their operating profit has fallen to $14.06 billion as of March.
“In the sporting world, two years of declining profits would be seen as a losing streak, and I hate losing,” stated Toyota President Akio Toyoda during a recent conference.
While Toyota has not specified the exact areas of focus, it is expected that the company will concentrate on promoting larger vehicles and making production processes more cost-effective.
This situation serves as a cautionary note for the broader industry, as Toyota remains one of the leading sellers in the North American market. Following a record year in 2016, new car sales appear to be entering a steady decline across the board.
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