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Business

Toyota boosts forecast, teams up with Mazda

The Japanese auto giant has lifted its full-year earnings forecast amid a double-digit jump in net profit in the last quarter and confirmed plans of a capital tie-up with rival Mazda to build a joint factory in the US.

Toyota has reported a jump in net profit jumped by 11 percent to 613 billion yen ($5.6 billion) in its fiscal first quarter ending June, with vehicle sales growing strongly in Japan and the United States.

Revenue at the Corolla and Prius hybrid maker rose 7.0 percent to 7.05 trillion yen, while quarterly operating profit fell nearly 11 percent, owing to marketing costs, including low-interest financing, cash-back rebates and other perks, in the cooling North American markets.

Nevertheless, in its earning report, published on Friday, Toyota said it expected profit for the year to March 2018 to come in at 1.75 trillion yen, up from an earlier 1.5 trillion yen forecast.

Toyota - which lost its crown as the world's top-selling automaker to Germany's in 2016- sold 2.59 million units in the quarter, slightly up from 2.52 million units a year ago. Demand rose in North America, Europe, Central and South America, Africa and the Middle East. Sales also rose in Toyota's home market, Japan, but they fell in the rest of Asia. 

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Trump trade

Japan's auto industry is facing uncertainty over the drive of US President Donald Trump to support US firms over foreign imports, a stance that has raised fears of a global trade war. Trump has targeted Toyota with strong criticism of its ongoing project to build a new factory in Mexico, threatening it with painful tariffs.

Presumably as a result of this, Japan's number-one carmaker is seeking a partnership with smaller Mazda, including a capital tie-up and plans to build a joint factory in the US.

Trump welcomed the announcement of the US factory, calling it "a great investment in American manufacturing." Toyota and Mazda will invest $1.6 billion to produce crossover models and Toyota's Corolla sedan in the US starting 2021. The plant is expected to have the capacity to produce approximately 300,000 vehicles a year and create up to 4,000 jobs.

Shares in Mazda, which has no US plant, soared more than 5 percent in Tokyo trade early Friday while Toyota was marginally lower.

uhe/rd (Reuters, AFP, dpa)

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