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Good, but not great, earnings and some looming bumps in the road have investors worried.
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Shares of Toyota Motor (TM +0.01%) fell on Thursday after the company reported earnings, on concerns about a scandal in Japan and softening demand in China.
As of 11:30 a.m. ET, Toyota's American depositary shares were down about 5.6% from Wednesday's closing price.
Toyota's electric bZ4X is a solid entry, but the company's EV efforts still lag its global peers. Image source: Toyota Motor.
Toyota's earnings weren't bad. The Japanese auto giant reported operating profit of 1.3 trillion yen ($8.7 billion) for the quarter ended June 30, in line with Wall Street estimates.
That was an increase of 17% from its operating profit in the year-ago period -- a good result, but not quite up to the growth that investors have seen in recent quarters. And there are increasing signs of bumps in the road ahead:
In a further blow to the company's image, Japan's Transport Ministry on Wednesday ordered Toyota to make "drastic reforms" to ensure that new-model certification procedures are properly followed in the future. That order could roil Toyota's executive suite.
More broadly, Toyota has been under fire for dragging its feet on electric vehicle (EV) adoption, though it has recently had success with its hybrid models as consumer demand for EVs has slowed.
But there was also some good news in its earnings report: Despite the near-term concerns, Toyota maintained its prior guidance projecting a profit of 4.3 trillion yen for the fiscal year that will end on March 31, 2025.