Toyota has announced financial results for the six months ended September 30, 200- the first half of FY 2010 which ends in March.

Although the economic downturn continues to dog Toyota, it has revised its forecast for the full fiscal year upward based on various government attempts to stimulate the world economy.

On a consolidated basis, the net revenues for the first half of the fiscal year totaled 8.378 trillion yen, a decrease of 31.3 percent compared to the same period last fiscal year. Operating income decreased from 582.0 billion yen to a loss of 136.9 billion yen, while income before income taxes and equity in earnings of affiliated companies was a loss of 63.0 billion yen. Net income* decreased from 493.4 billion yen to a loss of 56.0 billion yen.
* Net income attributable to Toyota Motor Corporation

Operating income, compared to the same period last fiscal year, decreased by 718.9 billion yen. Major factors contributing to the decline include 910.0 billion yen due to the effects of sales volume and mix and 320.0 billion yen due to the appreciation of the Japanese yen against the U.S. dollar and the euro that overrode the positive impact of Toyota’s cost reduction efforts.

TMC Executive Vice President Yoichiro Ichimaru said, “The net revenues and profits declined for this period due to the decline in vehicles sales in each region, as well as the negative impact of the yen’s appreciation. However, we continued to make improvements in our reduction in fixed costs and cost reduction efforts in the first half of fiscal year 2010. Progress with our Emergency Profit Improvement activities have been steadily bearing fruit. In addition, demand-stimulating measures by governments worldwide have contributed to our revised targets for the full fiscal year.”

Consolidated vehicle sales for the first half totaled 3.13 million units, a decrease of 1.12 million units compared to the same period last fiscal year.

In Japan, operating income decreased by 579.4 billion yen, to a loss of 257.7 billion yen, mainly due to the appreciation of the yen against the U.S. dollar. However, monthly vehicle sales in the domestic market have been improving year on year since August.

In North America, operating income decreased by 7.4 billion yen to 26.9 billion yen including 14.9 billion yen of valuation gains on interest rate swaps. Operating income, excluding the impact of valuation gains on interest rate swaps, increased by 56.7 billion yen to 12.0 billion yen. The increase was due to improved earnings from the financial services segment.

In Europe, operating income decreased by 27.3 billion yen, to a loss of 18.6 billion yen. Operating income in Asia decreased by 71.8 billion yen, to 65.4 billion yen. In Central and South America, Oceania and Africa, operating income decreased by 38.5 billion yen to 40.6 billion yen.

In the financial services segment, operating income increased by 17.2 billion yen, to 124.4 billion yen compared to the same period last fiscal year including 16.9 billion yen of valuation gains on interest rate swaps. Excluding these valuation gains, operating income increased by 72.7 billion yen to 107.5 billion yen. The increase was due to improved lending margins as a result of a declining funding cost and decreased expenses relating to loan losses and residual losses mainly in North America.

TMC announced an interim cash dividend of 20 yen per share for the first half of the fiscal year, in consideration of the serious financial situation which resulted in a net loss for the period.

TMC again revised its consolidated vehicle sales for the full fiscal year ending March 31, 2010 from 6.60 million to 7.03 million units, an increase of 430 thousand units. This figure is a revision to the previous forecast announced in August 2009 and reflects the increase in sales due to the success of various governments’ measures to stimulate demand this year, as well as sales of TMC’s own hybrids and other environmentally-friendly vehicles.

TMC also revised its target for Emergency Profit Improvement activities from 900 billion yen to 1.250 trillion yen, reflecting the improved outlook for vehicle sales and the progress of variable and fixed cost improvements in excess of our previous plan.

As a result, consolidated net revenues were revised up to 18 trillion yen, operating income to a loss of 350 billion yen and net income to a loss of 200 billion yen.

Commenting on the amended forecasts for FY2010, Executive Vice President Ichimaru said, “We will continue to promote profit improvement activities across the company. However, the outlook for global vehicle demand still remains uncertain. We will therefore continue to carefully analyze the global market going forward in order to further improve our earnings prospects.”

Toyota has begun mailing letters to owners of certain Toyota and Lexus models regarding the potential for an unsecured or incompatible driver’s floor mat to interfere with the accelerator pedal and cause it to get stuck in the wide-open position.

The letter, in compliance with the National Traffic and Motor Vehicle Safety Act and reviewed by the National Highway Traffic Safety Administration (NHTSA) points out that no defect exists in vehicles in which the driver’s floor mat is compatible with the vehicle and properly secured.

The Toyota finding is consistent with a recent decision by NHTSA denying a request for an additional investigation of unwanted and unintended acceleration of model year 2007 Lexus ES350 vehicles and model years 2002-2003 Lexus ES300. After conducting an extensive technical review of the issue, including interviews with consumers who had complained of unwanted acceleration, NHTSA concluded that “…the only defect trend related to vehicle speed control in the subject vehicles involved the potential for accelerator pedals to become trapped near the floor by out-of-position or inappropriate floor mat installations.”

This is the sixth time in the past six years that NHTSA has undertaken such an exhaustive review of allegations of unintended acceleration on Toyota and Lexus vehicles and the sixth time the agency has found no vehicle based cause for the unwanted acceleration allegations.

“The question of unintended acceleration involving Toyota and Lexus vehicles has been repeatedly and thoroughly investigated by NHTSA, without any finding of defect other than the risk from an unsecured or incompatible driver’s floor mat,” said Bob Daly, TMS senior vice president.

“Toyota takes public safety seriously. We believe our vehicles are among the safest on the road. Our engineers are working hard to develop an effective remedy that can help prevent floor mat interference with the pedal. As soon as it is ready, we will notify owners of the relevant models to bring their vehicle to a dealer for the necessary modification at no charge,” Mr. Daly added.

In the recently completed investigation, NHTSA conducted extensive testing on a Lexus ES350. The agency reported that:

“The vehicle was fully instrumented to monitor and acquire data relating to yaw rate, speed, acceleration, deceleration, brake pedal effort, brake line hydraulic pressure, brake pad temperature, engine vacuum, brake booster vacuum, throttle plate position, and accelerator pedal position. Multiple electrical signals were introduced into the electrical system to test the robustness of the electronics against single point failures due to electrical interference. The system proved to have multiple redundancies and showed no vulnerabilities to electrical signal activities. Magnetic fields were introduced in proximity to the throttle body and accelerator pedal potentiometers and did result in an increase in engine revolutions per minute (RPM) of up to approximately 1,000 RPM, similar to a cold-idle engine RPM level. Mechanical interferences at the throttle body caused the engine to shut down.”

The Toyota letter is an interim notice to owners of a future voluntary safety recall campaign. The following models are affected:

• 2007 – 2010 Camry
• 2005 – 2010 Avalon
• 2004 – 2009 Prius
• 2005 – 2010 Tacoma
• 2007 – 2010 Tundra
• 2007 – 2010 ES350
• 2006 – 2010 IS250 and IS350

Until Toyota develops a remedy, it is asking owners of affected Toyota and Lexus models to take out any removable driver’s floor mat and NOT replace it with any other floor mat.

The Toyota letter also informs owners of what to do if they experience accelerator pedal interference, general floor mat warnings and proper floor mat application information. Owners who have further questions are asked to visit http://www.toyota.com/floormats or http://www.lexus.com/floormats where the owner letter in its entirety can also be viewed. The most recent NHTSA report can be viewed on these websites as well.

Citing, “current severe economic realities,” Toyota has decided to withdraw from the FIA Formula One World Championship (F1) at the end of the 2009 season.

TMC leaves F1 having compiled 13 podium and 87 point finishes over eight
challenging seasons since 2002 with Panasonic Toyota Racing.

Buick and Jaguar have tied for first place in the J.D. Power and Associates 2009 Vehicle Dependability Study. Buick had been given a sixth-place ranking in 2008, while Jaguar had been in tenth place. Following in the top five rankings this year are Lexus, Toyota and Mercury.

Toyota received five segment awards- more than any other nameplate in 2009. Awards went to the Highlander, Prius, Sequoia, Solara and Tundra. Lexus received four segment awards for the ES 330 (in a tie with the Acura RL), GX 470, LS 430 and SC 430. Lincoln captured two awards. Acura, Buick, Dodge, Ford, Honda, Mazda, Mercury, Nissan and Scion each rank highest in one segment.

David Sargent, vice president of automotive research at J.D. Power said, “Lexus remains a very strong competitor in long-term quality. In particular, the Lexus LS 430 sets the industry standard for dependability, with fewer problems reported than any other model in the study.”

The study, which measures problems experienced by original owners of three-year-old (2006 model year) vehicles, includes 202 different problem symptoms across all areas of the vehicle.

The National Highway Traffic Safety Administration has alerted Lexus and Toyota owners about conditions that could cause the accelerator to get stuck open under certain conditions. The agency strongly recommends taking out removable floor mats on the driver’s side in certain models and not to replace them with any other mat, either from Toyota or any other brand.

“This is an urgent matter,” said U.S. Transportation Secretary Ray LaHood. “For everyone’s sake, we strongly urge owners of these vehicles to remove mats or other obstacles that could lead to unintended acceleration.”

NHTSA notes that there continue to be reports of accelerator pedal clearance issues which provide the potential for an accelerator pedal to get stuck in the full open position. A stuck accelerator may result in very high vehicle speeds and a crash, which could cause serious injury or death.

Toyota will soon launch a safety recall of various model year vehicles to redress the problem. However the safety agency warned owners to remove all driver-side floor mats from the models listed below immediately as an interim safety measure in advance of the recall.

Toyota and Lexus vehicles affected by this consumer alert are:

2007-2010 Camry
2005-2010 Avalon
2004-2009 Prius
2005-2010 Tacoma
2007-2010 Tundra
2007-2010 ES 350
2006-2010 IS 250 and IS350

This recall will affect roughly 3.8 million vehicles, representing the largest US recall in Toyota history and affected vehicle owners will be notified beginning this week.

The recall was sparked by a fiery crash that killed four family members in August near San Diego.

Toyota and the NHTSA recommend that owners of affected vehicles immediately remove the driver’s-side floor mat as a precaution. If the floor mat is in place, Toyota warns that if the vehicle continues to accelerate rapidly after releasing the accelerator pedal, this could be an indication of floor mat interference. If this occurs, Toyota recommends the driver take the following actions:

First, if it is possible and safe to do so, pull back the floor mat and dislodge it from the accelerator pedal; then pull over and stop the vehicle.

If the floor mat cannot be dislodged, then firmly and steadily step on the brake pedal with both feet. Do NOT pump the brake pedal repeatedly as this will increase the effort required to slow the vehicle.

Shift the transmission gear selector to the Neutral (N) position and use the brakes to make a controlled stop at the side of the road and turn off the engine.

If unable to put the vehicle in Neutral, turn the engine OFF, or to ACC. This will not cause loss of steering or braking control, but the power assist to these systems will be lost.

-If the vehicle is equipped with an Engine Start/Stop button, firmly and steadily push the button for at least three seconds to turn off the engine. Do NOT tap the Engine Start/Stop button.

-If the vehicle is equipped with a conventional key-ignition, turn the ignition key to the ACC position to turn off the engine. Do NOT remove the key from the ignition as this will lock the steering wheel.

Toyota Motor Sales (TMS), U.S.A., Inc., today reported September sales of 126,015 vehicles, a decrease of 16.1 percent from last September, on a daily selling rate basis. TMS posted sales of 525,975 units in the third quarter, a 28 percent increase over the second quarter.

“Improving economic conditions and the CARS program led to a significant increase for the industry in the third quarter over the first-half year,” said Don Esmond, senior vice president of automotive operations for TMS. “Moving into the fourth quarter, we expect continued momentum will close the year on a bright note.”

The Toyota Division posted September sales of 108,076 units, down 19.1 percent from last September. The Lexus Division reported September sales of 17,939 units, an increase of 7.3 percent from the year-ago month.

Toyota Division
Toyota Division passenger cars recorded September sales of 69,737 units, a decrease of 15.2 percent from last September. Passenger car sales were led by Camry and Camry Hybrid, which posted combined September sales of 25,745 units. The Prius mid-size gas-electric hybrid posted September sales of 10,984 units. Corolla recorded sales of 20,741 units. Venza reported sales of 4,738 units for the month.

Toyota Division light trucks posted sales of 38,339 units, down 25.3 percent from the year-ago month. Light truck sales were led by the RAV4 compact SUV with September sales of 10,398 units. Highlander and Highlander Hybrid posted combined sales of 5,216 units for the month. The Tacoma mid-size pickup reported sales of 7,513 units in September. The Tundra full-size pickup recorded September sales of 6,308 units. Sienna recorded sales of 6,442 units for the month.

Scion posted September sales of 3,683 units. The xB urban utility vehicle led the way with September sales of 1,539 units. The tC sports coupe posted September sales of 1,232 units. The xD reported sales of 912 units for the month.

Lexus Division
Lexus passenger cars reported September sales of 8,931 units, down 9.1 percent from the year-ago month. Passenger car sales were led by the IS, with combined sales of 3,346 units. The ES 350 luxury sedan posted September sales of 3,046 units.

Lexus Division light trucks reported September sales of 9,008 units, up 30.7 percent over the same period last year. Lexus sales were led by the RX luxury utility vehicle which posted combined September sales of 8,228 units, up 70.3 percent over the year-ago month. The RX 450h hybrid luxury utility vehicle reported sales of 1,168 units for the month, up 50.7 percent from last September.

TMS Hybrids
TMS calendar-year-to-date hybrid sales totaled 142,566 units. TMS posted September sales of 14,585 hybrid vehicles. Toyota Division posted sales of 12,125 hybrids for the month. Lexus Division posted September sales of 2,460 hybrids.

There were 25 selling days this month, compared to 24 selling days last September.