Toyota aims for consistent return on equity, finance executive says

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Toyota aims for consistent return on equity, finance executive says

TOKYO (Reuters) – Toyota Motor is increasingly focusing on return on equity as a performance measure, talking internally about raising ROE to 20% as one guideline, a senior finance executive at the Japanese automaker said during an interview on Monday.

While cautioning that ROE is not a perfect measure, the executive emphasised consistency over time-bound targets, adding that Toyota was not looking to formally commit to achieving a specific level by a certain date.

“What’s important isn’t just reaching a certain percentage by a specific time, but maintaining it consistently,” said Masahiro Yamamoto, chief officer of Toyota’s Accounting Group.

ROE is a ratio that measures a company’s profitability relative to its shareholders’ equity. Toyota’s ROE reached 15.6% for April-December 2024, in line with the 15.8% for the 2023 fiscal year. The metric has increased from 9.0% in fiscal 2022 and 11.5% in the financial year before that.

Toyota has long been working to improve its profit margin by reducing the cost it takes to produce its vehicles, thereby lowering the break-even point for its consolidated sales volume.

Speaking before the U.S. imposed 25% tariffs on imports from Mexico and Canada on Tuesday, Yamamoto said Toyota – which has assembly plants in both targeted countries – would provide information about the impact of tariffs once it was able to.

Last month, Toyota said a nearly $14 billion factory in North Carolina – its 11th U.S. manufacturing plant – was ready to begin production, with battery shipments for electrified vehicles including hybrids starting in April.

(Reporting by Daniel Leussink; Editing by Christopher Cushing)

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