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Toyota posts profits. Is the boost big enough?

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Itsuo Inouye/AP

(Read caption) Toyota Motor Corp. Senior Managing Director Takahiko Ijichi. center, is surround by reporters during a news conference at Toyota's Tokyo head office Wednesday, Aug. 4. The world's biggest automaker reported a quarterly profit of $2.2 billion, reversing from red ink a year earlier as global car sales recovered and raised its full year earnings forecast.

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Toyota Motor Co. posted $2.2 billion in profits for the April-to-June quarter. The company said its sales increased 27 percent this quarter to $57.3 billion compared with the same period last year, due to stepped up marketing efforts, cost-cutting measures, and rising sales in emerging markets.

But the automaker has still not recovered completely from the recall of nearly 10 million vehicles, which tarnished its image in the American market. The company reported a 3.2 percent decline in global sales for July, lagging the industry for the month.

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“The recall has really, really hurt them,” says George Magliano, director of automotive research in North America for IHS Global Insight. “They are spending a lot more on incentives than the competition, and this shows up in the overall volume.”

Indeed Toyota sales volume, though up from the dismal numbers seen a year ago at the height of the global recession, are still down significantly from its previous highs of around 9 million vehicles per year.

The carmaker raised its forecast for the year through March 2011, from 7.29 million vehicles to 7.38 million globally. The Japanese automaker saw a 70 percent jump in sales in Asia outside of Japan, and is increasing sales efforts in China, Brazil and India.

It’s not only in emerging markets that Toyota saw stronger numbers; North American Toyota sales saw a year-over-year increase of 26 percent this quarter.

“Volume is improving, but not enough, we need more,” says Mr. Magliano. “It is a function of the recovery, jobs, housing and credit. Until those things turn positive, there’s an issue here. That’s what’s holding the market back.”

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