TM Toyota Motor Corporation

By Sean McLain 

TOKYO -- Toyota Motor Corp. gave a strong signal Tuesday that it soon plans to jump on the battery bandwagon and make electric cars despite expressing skeptical views about their range and charging times.

News of Toyota's technology shift came as its latest results, released Tuesday, showed the company's profits were eroded by a stronger yen and the shift by American car buyers toward trucks and sport-utility vehicles. The company is turning to its regular playbook of trimming costs to bolster earnings, and slightly boosted its profit forecast for the year ending March 2017.

Toyota's strategy is getting buffeted by market trends in the U.S., where sales of its eco-friendly flagship Prius hybrid are tanking as cheap gas encourages U.S. consumers to reject gas-electric hybrids. Meanwhile, eco-minded car buyers are lining up for battery-powered models like those from Tesla Motors.

"Though electric vehicles have many issues such as its range, and the length of recharging time and battery performance, depending on the energy situation in each country and region, and infrastructure, we would like to get ourselves ready to commercialize them," said Takahiko Ijichi, Toyota's executive vice president, without giving a specific time frame.

To be sure, Toyota has previously said that it would always develop electric vehicles based on consumer demand, but has maintained that battery-powered cars lack mass market appeal because of range and recharging concerns.

The Japanese company is still dependent on passenger cars for volume, such as the Camry family sedan and the Prius, despite considerable changes in recent years to increase the number of light trucks in its mainstream lineups. Toyota's U.S. passenger-car sales for the quarter fell about 9%, while truck and SUV sales rose 6.5% from a year earlier.

Net profit for the July-September quarter fell 36% to 393.7 billion yen ($3.78 billion) from 611.7 billion yen a year earlier -- Toyota's second consecutive decline.

The company maintained its sales guidance but raised its net profit expectations to 1.55 trillion yen from 1.45 trillion yen as a result of cost-cutting plans. The company still expects net profit to decline by a third in the current financial year, which ends in March 2017, after three years of record-breaking profits buoyed by a weak yen.

Japanese car makers are finding it difficult to keep their footing in the automotive market as a stronger yen erodes repatriated profits.

Toyota has maintained a strong manufacturing base at home, producing roughly three million vehicles in Japan. A stronger yen makes cars produced in Japan less competitive. Rivals Honda and Nissan receive a much smaller percentage of their sales from Japanese exports.

Toyota earlier this year said it plans to make more vehicles and source more parts in the U.S. to soften the impact of the strengthening yen. President Akio Toyoda oversaw a reorganization of the company to make it more nimble and better at building cars people want to buy.

Toyota believes that car buyers will show increasing demand for vehicles powered by hydrogen fuel cells, which it says have similar range and refueling times to conventional vehicles. But it has faced infrastructure challenges. Delays in construction of hydrogen refueling stations in California are hampering sales of its Mirai hybrid in a market known for its green car sales.

Toyota still plans to sell 30,000 fuel cell vehicles a year by 2020, in time for the Summer Olympics in Tokyo, which it hopes to use a platform to demonstrate the prowess of the technology.

Its immediate plans are to improve fuel economy in conventional vehicles, and roll out a broader array of hybrids, including the coming Prius plug-in hybrid.

Write to Sean McLain at sean.mclain@wsj.com

(END) Dow Jones Newswires

November 09, 2016 02:48 ET (07:48 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.