Toyota shares hit record high after earnings upgrade, domestic rivals in focus

Market reaction: Japanese automotive firm Toyota Motor shares hit a record high on Wednesday after its earnings upgrade the prior day, with rivals Honda and Nissan also posting gains on expectations that their solid hybrid lineups may benefit from cooling interest in electric vehicles (EVs).

Weakening momentum for battery-powered vehicles has led many overseas automakers to scale back roll-out plans for EVs or cut production targets as lower government subsidies and high interest rates make EV purchases harder for customers.

Toyota's strong financial performance in the third quarter was helped by robust demand for gasoline-electric hybrid vehicles, the world's top-selling automaker said on Tuesday.

The company's shares were up 4 per cent on Wednesday afternoon after jumping as much as 7.3 per cent to a record high in the morning session, outperforming a 0.2 per cent advance in the broad Topix.

Nissan Motor's shares rose 2.9 per cent in afternoon trade after gaining as much as 4.3 per cent earlier. Earlier, Honda Motor advanced 1.3 per cent after rising as much as 2.6 per cent earlier.

"We think the market is now rethinking the potential of hybrid products, which are a strength of Toyota," analysts at Goldman Sachs wrote in a note released after Toyota raised its operating profit guidance by nearly 9 per cent for the 12 months ending March 31.

The company's progress on raising prices that helped boost its earnings per vehicle was likely the biggest driver for the higher operating profit forecast, the analysts added.

Toyota's shares have risen 80 per cent since the start of 2023, compared to a 69 per cent rise in Honda's shares and Nissan's 47 per cent gain over the same period.

Their gains easily eclipsed a 34 per cent rise in the Topix over that period.

After posting its results, Toyota announced on Tuesday it would invest an extra $1.3 billion in its Kentucky plant in the United States for electrification efforts, including assembly of a three-row battery e-sports utility vehicle (SUV) for the US market.