On Wednesday, Toyota Motor (7203.T) shares reached a record high, driven by an earnings boost the day before. Rivals Honda and Nissan also experienced gains as expectations grew that their robust hybrid lineups would capitalize on the diminishing interest in electric vehicles.
Low government subsidies and high interest rates create difficulties for customers in purchasing electric vehicles. As a result, many overseas automakers have scaled back their EV roll-out plans or reduced production targets.
On Tuesday, Toyota, the world’s best-selling automaker, attributed its strong financial performance in the third quarter to robust demand for gasoline-electric hybrid vehicles.
On Wednesday afternoon, its shares were up 4%, having risen as much as 7.3% to a record high in the morning. They outperformed the broad Topix (.TOPX) index, which rose 0.2%.
In afternoon trading, Nissan Motor (7201.T) shares rose 2.9%, having climbed as much as 4.3% earlier. Concurrently, Honda Motor (7267.T) shares increased by 1.3%, reaching a peak of 2.6% earlier.
“We think the market is now rethinking the potential of hybrid products, which are a strength of Toyota,” Goldman Sachs analysts wrote in a note. This was released after Toyota raised its operating profit guidance by nearly 9% for the year ending March 31.
According to the analysts, the company’s progress in raising prices, a factor that has helped boost its earnings per vehicle, is the most likely driver of the higher operating profit forecast. This upward revision in the operating profit forecast is attributed to the successful initiative in price increases.
Since the beginning of 2023, Toyota’s stock has risen by 80%. In comparison, Honda has experienced a 69% increase, and Nissan has seen a 47% increase over the same period.
Their gains easily outpaced the Topix’s 34% increase during that time period.
After reporting its results, Toyota announced on Tuesday that it would invest an additional $1.3 billion in its Kentucky plant for electrification efforts. This includes the assembly of a three-row battery electric sports utility vehicle for the US market.
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