Toyota Posts 1st Operating Loss In 70 Yrs.

Japanese Auto Giant Lowers Global Vehicle Sales Forecast, Puts Ambitious Expansion Plans On Hold

(AP)  Toyota Motor Corp. said Monday it will report the first operating loss in 70 years, acknowledging that after a decade of rapid growth it can no longer escape the slowdown plaguing the global auto industry.

The Japanese auto giant also lowered its global vehicle sales forecast for the second time this year and said it was putting ambitious expansion plans on hold, in large part because of a precipitous drop in demand in the key U.S. market.

"The tough times are hitting us far faster, wider and deeper than expected," Toyota President Katsuaki Watanabe told a gloomy news conference at the company's Nagoya headquarters. "This is an unprecedented crisis requiring urgent action."

Toyota had reported strong growth in recent years, boosted by heavy demand for its fuel-efficient models like the Camry sedan and Prius gas-electric hybrid.

But Watanabe said a severe drop in demand, especially in the U.S., which accounts for one-third of vehicle sales, and profit erosion from a surging yen were too much for Japan's No. 1 automaker. Overall U.S. auto sales fell to their lowest level in 26 years last month.

"The change that has hit the world economy is of a critical scale that comes once in 100 years," Watanabe said.

Toyota said it expects an operating loss of 150 billion yen ($1.66 billion) for the fiscal year ending in March, compared with an operating profit of 2.27 trillion yen ($25.2 billion) a year earlier.

Toyota said it would still post a small net profit of 50 billion yen ($555 million), thanks to outside dividend income, down from year-earlier earnings of 1.7 trillion yen ($18.89 billion). But operating income is seen as the best reflection of its core business.

The outlook was a dramatic change of fortune for the iconic company, which in recent years had outlined ambitious expansion plans and weathered an industry slowdown much better than its U.S. rivals.

Toyota, which started in business as a loom maker, began making trucks and passenger cars in 1937. Its first and only operating loss came the following year, before it started reporting formal results in 1941.

At the time, Toyota was still far behind the American automakers. With World War II, Toyota started a side business making aircraft engines, but that group company switched to making auto parts and sewing machines after the war.

In its forecast, Toyota lowered the number of vehicles it expects to sell globally this calendar year to 8.96 million, down 4 percent from last year. Earlier this year, Toyota had projected worldwide sales of 9.5 million vehicles.

Initially, it had an even more aggressive target of 9.85 million, and expectations had been growing that the tally would reach 10 million in coming years - allowing Toyota to dethrone General Motors Corp. as the world's top automaker.

Tsuyoshi Mochimaru, auto analyst for Barclays Capital in Tokyo, warned worse may be ahead.

U.S. auto sales aren't expected to start recovering until late 2009, and the dollar - already at a 13-year low against the yen - could lag further, he said. A strong yen hurts results because overseas profits must be converted into the Japanese currency.

"The problem is next year," said Mochimaru. "It's unmistakable that things are extremely tough for Toyota."

Watanabe and other Toyota executives repeated a recent announcement that expansion plans will be on hold, including a new plant in Mississippi and projects in India.

Toyota said there were no plans to lay off any full-time employees, though it plans to cut the number of temporary workers at its Japanese plants in half to about 3,000.

Toyota is a relatively old-style Japanese company that offers lifetime employment, and only in recent years has hired and let go of temporary workers to adjust production. It said it was reviewing overseas jobs but had not reached a decision.

Watanabe vowed Toyota would grow so lean it would realize profitability even if its worldwide sales fall as low as 7 million vehicles - what he called the basic "bottom line" for Toyota.

"We must change to become more slim, muscular and flexible," he said.

The automaker will focus on hybrids and small cars, and invest in ecological technology to prepare for long-term growth, officials said.

While Japan's automakers are in far better financial shape than their cash-strapped American counterparts, the global slowdown is hitting them hard. Last week, Japan's No. automaker, Honda Motor Co., also lowered profit and sales forecasts and declined to give a vehicle sales goal for 2009.

Monday marks the second time Toyota reduced its forecast. Initially, it had projected net profit of 1.25 trillion yen ($13.9 billion) for the fiscal year, but last month lowered that to 550 billion yen ($6.1 billion).

Also Monday, it lowered its revenue forecast to 21.5 trillion yen ($239 billion), down about 18 percent from a year earlier.

Toyota's U.S. vehicles sales plunged by a third on year in November, when overall sales fell to their lowest level in more than 26 years. And there is little hope for a quick fix as consumers hold back big purchases amid a credit crunch, rising unemployment and fears about the future.

The company's stock fell 5 yen, or 0.17 percent, to 2,895 yen in Tokyo. The benchmark Nikkei 225 stock average rose 1.5 percent.

[oldpilot954]

The simple truth is that Toyota will evaluate the situation, make watever changes are necessary, and continue on. The Big 3 just cheapened their product quality and closed their eyes to the real problems. While we may resent a Japanese company displacing the US owned companies we also have to remember that ANY maunfacturing in the US makes jobs. Somehow in all the rants about wages in the south, nobody mentions that in some of those areas a much lower wage has the same effective buying power as the higher wages in major population centers.

[jsd330]

I read an editoral in the paper this morning, sbout how the senators and congreesman from the south, wanted the pay consessions from the uaw, because toyota wants to cut wages to $12 per hour and cut benefits. Without the uaw cutting wages and benefits,they aren''t able to do this for fear their employee''s will want to unionize.
It cost''s the foreign automakers less to assemble a vechical here then it does in their own country''s, except for maybe korea and china.

[roscoe2400-2009]

Some people are barking up the wrong tree. The Big 3 got a $17 billion LOAN. Wall Street got a $700 billion BAILOUT that they don''''t have to pay back--------------------------------------------------------------------------------
Posted by incog-nito at 01:23 AM : Dec 23, 2008


Don''t get me wrong, because I, in no way approve of the financial bailout program. But I think you are a little misguided on what has happened.

1)The funds given to the financial institutions have been secured through stock or equity purchases. The Gov''t. now owns a piece of all of these compainies that rec''d. bailout money. So, as long as they don''t fail---- the stocks can be sold at some future time.

2) The "loan" that was given to the BEG3---- A "Loan" implies that the debt will be repaid. These guys have no ability to repay this money. GM was already $60 Billion in debt per their last financial statement, Sept 28,2007. Chrysler--- no one knows their true situation because they''re a privately owned company, owned by Cerberus Capital Management, who refuses to infuse any more money in Chrysler because they realize it''s the same as throwing money down a rat hole. So, again, a loan!!!! Besides, why should Cerberus put their own money down the rat hole if they think the taxpayer will do it for them? Additionally, what%u2019s to keep Cerberus from just taking the money and liquidating Chrysler??? Laughing all the way to the bank!!!!

[incog-nito]

Posted by fer60us at 02:03 AM : Dec 23, 2008

Yes, yes, big, heavy vehicles are generally safer than smaller, lighter ones. Simple law of physics. Does that mean we should all buy Hummers if we can afford it? "Regular"-sized vehicles were perfectly safe at one point, because most vehicles on the road were about the same size and height, and their bumpers at the same level. Then the big SUVs came along with their heft and their bumpers that point straight at the sedan''s windows. Then suddenly cars are now unsafe and people must buy big wasteful SUVs to compensate.

By your logic, since SUVs are now so common that they''ve become not very safe relative to each other, maybe people should start buying tractor-trailer rigs if they truly want to be safe. See where that kind of logic can take you.

[roscoe2400-2009]

Odd how you''''ve been the voice of right wing whinners against the UAW, the corruption at GM, Ford and Chysler starts at the top and filters down

Posted by xmas6661 at 09:38 PM : Dec 22, 2008

You really need to read my entire post in order for you to understand my viewpoint. The problem is not just the United Auto Whiners.

No one other than the BEG3 are responsible for their own current situation! Here''s reality!!----
1)There are three factors than can cause a business to fail, bad product, bad management or bad employees. The BIG3 have all of the above.
2)They have continued to lose market share year after year--- for decades--- because they failed to develop and produce a product that satisfies the consumer at a price and quality level that is acceptable to the consumer. Had they complied with the expectations of the customer, there would be no foreign transplant companies in the US today.
3)Nothing can be done from the outside of the organization (BEG3) to save it. It needs to come from within. And they have demonstrated time after time that they simply do not have the capacity to change from within.
4)Giving them more money to support the current system and philosophy is no different than throwing money down a rat hole. To keep doing the same thing and expecting a different result is nothing less than insanity.

The United Auto Whiners are not the entire problem, but they have contributed their fair share to the demise of these organizations!

[roscoe2400-2009]

Someone had to loan thim some money----- or we wouldn''t have this situation right now!! That'''''''' a pretty good trick!
Posted by roscoe2400

Your business acumen sucks. A corp as large as GM can have a rolling debt like you talk about ALL the time. The biggest problem is the drying up of any sales due to the financial meltdown and the subsequent credit freeze. This causes much of their debt to come due with no income to pay it. It''''s a classic cash flow problem. You need to take some classes.
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Posted by bm6005 at 11:21 PM : Dec 22, 2008bm6005---Tea---- right----- I guess you believe the goofball that I was responding to. The one that says GM has never in 100 years of existence ever asked for a loan! Right! So, their entire $60Billion in debt per their last operating statement is simply a cash flow problem?? LOL !!! All of their $60 billion in debt is SECURED DEBT. Do you know what that is???? That means someone has LOANED them the money, using thier assets as collateral!!!! Your business acumen sucks!!! You need to take some classes!!! You''re a hoot !!! You should think before you speak!

[neonink]

xmas:
As of 2007, the UAW represented 180,681 members at Chrysler, Ford and General Motors; it also represented 419,621 retired members and 120,723 surviving spouses.


Therein lies the problem. 180,000 workers support half a million retirees who are never happy and always want more, even though they are no longer producing anything but waste.

America has already converted to a socialist state. It is too late. We have the same problem in our military and state budgets. We also have the same problem with our social security system.

Our children will have to ante up for everything. I wouldn''t blame them at all if they don''t chunk us in our graves. They have been left without hope, because we set them up for failure, no matter what they do.

[irmcvet971]

So where are all the Southern Nazi''s? They should be screaming their collective heads off insisting on Restructuring. What''s that you say! Don''t expect anything from the Fascist on this because Toyota is a scab company and those Fascist LOVE those scabby people?

[fer60us]

Cont''d

Superior efficiency? Years ago it was demostrated that Honda was cheating with the odometer, it gave longer distances therefore better fuel economy. A ligther car also uses less energy but doesn''t have that much inertia so it depends how you drive. Any American car can compite with the Asian cars on efficiency. And I would like to see what the Prius owners are going to do with their bateries once they are gone, how much are they going to pay for new ones and for the disposal fee. And besides that''s an ugly car. An European diesel car is much fun, better car and gives the same or better mileage than the ugly Prius.

Again, Japan and Korea subsidize their car industry and the help the 3 are getting is not a bailout is a loan. I am confident that they will provide the car the American people is looking for, from fuel efficient to gas guslers with less emisions or hybrids.

[fer60us]

IamHungry68, you are right, Legendary! Which not necessarly means accurate or true. I haven''t seen any "Legendary" Toyota or Honda sell at an auction, have you? What''s the oldest Asian car you have seen rolling down the street, what about an American car?

Almost all Consumer Reports, JD Power, etc. are biassed towards Asian cars, but they still are not match for American cars, and GM sells still more cars worldwide than Toyota. Every single Lexus model is a bad copy of Mercedes, BMW and other top brands. They can''t copy Cadillac models since they are unique. When have you seen a Lexus model that doesn''t look like a previous year or so BMW or Mercedes? Japan is an expert at copying everything and not necesarily making it better. Lexus are for snoobs!

Crash ratings are related to physics rather than safety, if the car is lighter because it has more plastic (like a Toyota or Honda) then at the moment of impact it will move on the direction of the object or vehicle that hitted it, less weight less inertia. The heavier the more difficult to move. The ratings are more related or linked to airbags, airbags everywhere, but they are tested at very low speed. I rather prefer to be in a heavier car with the right amount of safety airbags. Have yor reviewed the statistics about those safer cars? Which ones have more fatal accidents...do your homework.

[whitemale08]

What do you call a nation who imports 75% of what they consume?

A 3rd world country!

You can call it a ''service economy'' or ''financial economy'' but why not call it for what it is...

A poor 3rd world country who needs an IMF/World Bank loan.

[incog-nito]

Some people are barking up the wrong tree. The Big 3 got a $17 billion LOAN. Wall Street got a $700 billion BAILOUT that they don''t have to pay back, and that nobody seems to know what they''re doing with the money. Anybody notice the slight difference? If you''re going to complain about the automakers, spend a little more time complaining about Wall Street. Or is it old news already?

[McHineguy]

Well, the US companies got a bailout deal from president Bush. I hope they make good use of it and become profitable while the foreigners are in trouble. Wonder what their plan is to do that? I sure hope its a good one. But I am concerned because their employees all say management is no good and management says its the UAW. Some of them just say its the banks on Wall Street these last 25 years. I sure hope they figure it our fast and get cracking while they can.

[bm6005]

When Chrysler got their LOAN in the late 80''s they paid it back early and the feds made a profit on it! I believe "bailout" refers more to the slimy crooks on wall street!

[bm6005]

Someone had to loan thim some money----- or we wouldn''''t have this situation right now!! That'''' a pretty good trick!

Posted by roscoe2400

Your business acumen sucks. A corp as large as GM can have a rolling debt like you talk about ALL the time. The biggest problem is the drying up of any sales due to the financial meltdown and the subsequent credit freeze. This causes much of their debt to come due with no income to pay it. It''s a classic cash flow problem. You need to take some classes.

[win4usa]

Boycott so Washington will hear us: NO BAILOUTS FOR ANYONE!

[xmas6661]

United Auto Whiners!!!



Posted by roscoe2400 at 08:43 PM : Dec 22, 2008

Odd how you''ve been the voice of right wing whinners against the UAW, the corruption at GM, Ford and Chysler starts at the top and filters down

THE UAW is but a small part of the problem you''re just scamming the board as the GOP media is doing on the INTERNET, RADIO, PRINT AND TV

And isn''t strange that for 100 years GM has not faced a situation like it has now and

As of 2007, the UAW represented 180,681 members at Chrysler, Ford and General Motors; it also represented 419,621 retired members and 120,723 surviving spouses.

How can 180,681 UAW employees for Chysler, Ford and GM all multi national corportions be the reason that those companies are failing

Corporate structure

General Motors is structured into the following groups:

GMAP - Asia-Pacific
GME - Europe
GM LAAM - Latin America, Africa and the Middle East
GMNA - North America
GMAC Finance and insurance services
SPO Service, Parts and Operations
GMAC Finance and insurance services



GMAC Finance and insurance services probably the department that''s lost most of the company''s money over the last couple years

Chances are good the GM, FORD AND CHYSLER finance dept were playing with the companies money in the stock market

[slinginrich]

Wow---- I guess if it''''s OK for the Wall Street Bankers then I''''m sure it is OK for Larry, Curly and Moe of the BEG3 along with Mr. Get-The-Finger of the United Auto Whiners!!!


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Posted by roscoe2400 at 08:43 PM : Dec 22, 2008
+ report abuse

Arguing about a couple $Billion$ for the Bigs at this late date is like disagreeing about Seat Cusion colors on the Deck Chairs of the Titanic. We''re way past this even mattering now. It''s nothing but created distractions to occupy the Drooler''s attention away from the coming Total Collapse of the entire World Economy.
People who''ve never known want of any kind, hunger, thirst, or lack of safe environment, are going to be rudly awakened to a terror they never dreamed could happen in their reality. It''s real, it''s going to happen, and it won''t be long now......get ready.

[roscoe2400-2009]

What to hell does fuel efficiant cars have to with it? American cars are selling they out sold foreign cars 2-1 in the US.
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Posted by Mccain08nc


Not sure where you get this---- but the published numbers for US market share are 47% for the combined BEG3---- 53% are foreign brands. 2008 numbers

[roscoe2400-2009]

Just ONE of the Wall Street Bankers compensation package including bonuses, equals ALL the pay and benefits of ALL the Union Workers at ALL the Bigs for the last 9 years.....(Just to put a little context to it all)....
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Posted by slinginrich at 08:26 PM : Dec 22, 2008




Wow---- I guess if it''s OK for the Wall Street Bankers then I''m sure it is OK for Larry, Curly and Moe of the BEG3 along with Mr. Get-The-Finger of the United Auto Whiners!!!