The crisis facing the world’s largest car-makers intensified yesterday as the Japanese giant Toyota, which last year reported record profits, forecast its first annual operating loss. The world’s biggest car-maker blamed a continued slide in vehicle sales and a rise in the Japanese yen for the first such loss in its 71-year history.
Toyota cut its group operating forecast to a loss of Y150bn (£1.1bn) for the year to the end of March, after shocking financial markets last month by slashing the same forecast by Y1trn to Y600bn. It made a record profit of Y2.27 trn only last year.
Toyota now expects to make a net profit of Y50bn – a fraction of the previously forecast Y550bn.
Automakers around the world are facing a sharp fall in demand as the global financial crisis spreads, squeezing credit and consumer confidence.
Like the rest of the industry, Toyota has mothballed factories, slowed assembly lines and delayed projects, such as a new plant in Mississippi to build the Prius hybrid model, and said it would continue those moves until the tide turned. The company will also postpone all projects to expand capacity, move 16 of its 75 global assembly lines to a single shift, and cancel directors’ bonus payments for this year, to improve near-term profitability, said the car-maker’s president, Katsuaki Watanabe. He warned: “The change that has hit the world economy is of a critical scale that comes once in a hundred years.”
“This is an unprecedented emergency,” said Mr Watanabe. “Unfortunately, I cannot see now where the bottom will be.”
Mr Watanabe said the costcutting measures, which include a freeze on “virtually all” capacity expansion projects worldwide, were designed to allow Toyota to turn a profit on annual sales of as few as 7m vehicles.
Toyota sold 8.9m vehicles last year and entered 2008 expecting to become the first carmaker to top the 10m mark, before the credit crisis and recessions in the US, Japan and Europe caused an abrupt collapse in demand.
Sona Iliffe-Moon, a spokeswoman for the automaker’s U.S. arm., said the company has not had any layoffs since the 1950s.
UPDATE: December 24, 2008 07:33 am
Toyota’s forecast on Monday of a $1.7bn loss for the year to end in March inevitably prompted fresh speculation regarding the future of their F1 team, which has been much discussed since Honda’s decision to quit the sport earlier this month.
But while Katsuaki Watanabe, President of Toyota Motor Corporation, admitted that the company was “facing an unprecedented emergency” due to declining sales worldwide, he stressed that would not mean turning their back on F1.
“We continue F1 and other motorsport activities while cutting costs,” Watanabe said.
In an even more bullish vein, the head of the Japanese car giant’s Formula One team, John Howett, said he is approaching 2009 “with optimism.”
The Cologne-based team’s President, John Howett, backed fellow FOTA luminary Luca di Montezemolo in calling for a greater than 50 per cent share of the sport’s commercial revenue for the teams.
“I believe in the Champions League it is upwards of 96-97 per cent of revenues that is redistributed depending on where you finish, whereas at the moment we receive 50 per cent.
“So given the current circumstances people would like to reopen that discussion,” he said.
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