http://www.iht.com/articles/2008/12/...s/22toyota.php
TOKYO: Toyota Motor will lose money in its core auto-making business for the first time in 70 years this fiscal year, the company said Monday, in a sign of how the global economic crisis is hurting even the mightiest carmakers.
The Japanese auto giant, which has been neck and neck with General Motors to be the world's largest vehicle-maker, said it still expected to eke out a narrow group net profit for the year, which ends March 31, 2009.
But the company, which just a few months ago appeared to be riding above the ills that have crippled the big U.S. automakers in Detroit, said it had seen plunging sales not only in North America but even in emerging markets, which initially seemed to be immune to the United States malaise.
"The change in the world economy is of a magnitude that comes once every hundred years," Toyota's president, Katsuaki Watanabe, told a press conference in Nagoya, Japan, near the company's Toyota City headquarters.
Sales last month dropped "far faster, wider and deeper than expected."
Toyota expects operating loss Ireland to invest €5.5 billion in 3 major banksGerman economy expected to contract 2.7% in 2009With some $18.5 billion in cash, and relatively little debt, Toyota is still in far better shape to weather the downturn than G.M. and Chrysler, which on Friday received a $17.4 billion emergency bailout from Washington.
Still, Toyota's downward revision, its second in two months, underscores how the worst financial crisis since the Depression has damaged foreign as well as domestic American carmakers. It is also a stunning setback for Toyota, which until recently had seemed unstoppable with eight straight years of record profits.
"They've caught the same cold that Detroit has caught, though not as bad" said Christopher Richter, senior analyst in Tokyo at Calyon Capital Markets Asia, an investment bank in the Crédit Agricole group. "Everything is going wrong for Toyota this year."
Indeed, the crisis has not spared Japan's automakers. The current financial turmoil has pushed up the value of the Japanese yen by about 25 percent since the summer, making Japanese products more expensive overseas.
They have also suffered from the recent steep declines in U.S. auto sales. In November, Toyota saw its sales drop 33.9 percent and Honda Motor 31.6 percent, faring just slightly better than G.M.'s 41 percent decline.
Most of Japan's eight automakers have lowered their earnings forecasts, cut production and laid off non-staff workers. Last week, Honda, the nation's second-largest carmaker, slashed its profit forecast for the current fiscal year by two-thirds.
Toyota has been seen as the most vulnerable of Japan's big automakers because it had been investing heavily in new products, including a full-sized pickup truck for the U.S. market, just when auto sales started to fall.
On Monday, Toyota said it expected a loss this fiscal year of ¥150 billion, or $1.7 billion, in its group operating revenue, the amount it earns from its mainstay auto operations. That would be a huge reversal from the ¥2.3 trillion, or $28 billion, in operating profit it reported last fiscal year.
Despite the loss in its car business, the company said it still expects to post a group net profit in same period of ¥50 billion, or $560 million.