Toyota is at a crucial moment to avoid being in the losing group! The focus is on regaining sales power in the USA and China, with the spotlight on earning power. 【Earnings Preview】

● $Toyota Motor (7203.JP)$Toyota Motor is scheduled to announce its third quarter (October-December) earnings for the fiscal year ending in March 2025 on February 5.
The July-September quarter saw a significant decline in profits, reversing the positive trend from the April-June period. Struggles in the two major markets of USA and China became evident. Particularly, the poor performance in the USA market stood out, with a decrease in passengers carried compared to the same period last year, and the operating margin of the North American business dropped to 0.6%.
October-DecemberToyota's global passengers carried volume decreased by 1.6% compared to the same period last year, showing an improvement from the 3.6% decline in July-September.and the decrease wasimproved from the 3.6% decline in July-September.The decline in the USA also improved, andturned positive in China compared to the same period last year.。
●According to Analyst Consensus,Operating margin for October-December is expected to increase from 10.1% in July-September to 11.6% in a V-shaped recovery.is in effect.
●In the assessment by 20 Analysts, 35.0% are bullish, 30.0% are slightly bullish, 35.0% are neutral, with a mutual evaluation of "slightly bullish". The average target price is 3,214.21 yen, offering an 8.1% upside from the January 31st closing price.

However, the unease hidden behind Toyota's strong performance came to the forefront in the second quarter (July-September). A major factor was the tough conditions in the two largest markets, China and the USA. In China, facing strong competition from local EVs, it experienced consecutive decreases in passenger vehicles carried and a notable decline in market presence. On the other hand,In North America, the operating margin dropped to 2.0% in the April-June quarter and further to 0.6% in the July-September quarter.In the USA, impacted by recalls of multiple vehicle models and production stoppages, passenger vehicle carried dipped below the previous year's sales in June for the first time in 3 years and 1 month. In September, it experienced a 20.3% decrease, signaling a significant slowdown.
In addition to the downturn in the two major markets and the certification fraud issue, Toyota's operating margin for the July-September period decreased from 11.1% in the April-June period to 10.1%. The recovered US market (10.8%) was once again overtaken. $Tesla (TSLA.US)$Due to the rise of Chinese competitors intensifying competition and making winners and losers more evident, even Toyota, if the 'sales power' and 'earning power' continue to weaken, could transition from being a 'winner' to a 'loser'.

Will countermeasures emerge against the Honda-Nissan integration?
The big news in the current automotive industry is undoubtedly $Honda Motor (7267.JP)$and $Nissan Motor (7201.JP)$Negotiations are underway for a management integration.
Among domestic manufacturers, the rapid approach of the second and third largest in the country $Suzuki Motor (7269.JP)$、 $Subaru (7270.JP)$、 $Mazda Motor (7261.JP)$By companies without a cooperative relationship with Toyota"Non-Toyota Alliance"also can be viewed as a "Non-Toyota Alliance".
On the contrary, outside of subsidiaries like Daihatsu, the Toyota Alliance remains in a loose cooperative relationship. Following the integration of Honda and Nissan and the downturn of European players,There is a possibility of accelerated industry consolidation.In addition, the movement of Toyota, the world's leading company in the industry, is attracting attention. It will be necessary to pay attention to whether any suggestions or comments will come out at the timing of the earnings announcement.