Toyota back on accelerator as forecast is boosted 45%

The world's largest car maker had to recall millions of vehicles in the US and halt production of some of its most popular models in January last year because of a risk that accelerator pedals could stick.

The company agreed to pay $38.4 million (24m) in fines relating to the recalls, but yesterday US transport officials cleared Toyota's electronics of causing cars to accelerate unintentionally. The findings vindicated Toyota's claim that it had fixed the only safety problems with its vehicles.

As its PR nightmare receded in the rear view mirror, Toyota posted a smaller-than-expected fall in third-quarter operating profit and raised its prediction for the full year by 45 per cent to 550 billion (4.1bn). The company said stronger sales in Asia and lower costs were boosting profitability.

Chris Richter, a car industry analyst with CLSA Asia Pacific Markets in Tokyo, said the company's news was "a double header". He said: "This is still a work in progress and they have a lot of things to fix, but if things are getting better I want to get in Toyota now, when things are still bad."

In Tokyo, Toyota's shares jumped 5.2 per cent to a nine-month high on the results.

However, analysts cautioned that the next chapter in Toyota's recovery could be tougher still, as production remains rooted in its Japanese homeland, unlike many of its rivals.

Any attempt to shift manufacturing to cheaper bases could lead to another round of unwelcome political fall-out for Japan's largest company.

Also reporting yesterday were Japanese rival Nissan and French group PSA Peugeot Citroen.

PSA returned to profit in 2010 and set its sights on India and other fast-growing emerging markets to compensate for lack of action in Europe.

Chief executive Philippe Varin said several locations in India were being considered, initially to produce a mid-sized saloon car under the Peugeot brand. He declined to give a precise timetable but said he hoped the company would make a "significant step forward" in 2011.

PSA said its Chinese joint venture with Dongfeng would pay a dividend for the first time on 2010 profits, and it expected authorities to grant approval for its second Chinese foray, building vans and Citroens with Changan, in the first half of 2011.

PSA posted full-year net profits of €1.13bn (960m), against a 2009 loss of €1.16bn, beating analysts' expectations.

However, "recurring" operating profit for its automotive unit - stripping out contributions by parts maker Faurecia, logistics unit Gefco and Banque PSA Finance - was just €621m.

Barclays Capital analyst Kristina Church called the results "uninspiring", while Jose Asumendi at RBS said they were "mixed, with the autos business delivering margins in the second half of 2010 that were below consensus and our estimates, while the financial services business remained strong".

Meanwhile, Nissan raised its global sales forecast for the year by 65,000 units to 4.17 million vehicles, mainly on better-than-expected sales in China in the October-December quarter.

Quarterly profit fell 15 per cent on a stronger yen and sliding Japanese demand.