Used to Success, Toyota Now Copes With Major Losses

The Big Three would love to have Toyota's troubles. No one's talking about the Japanese automaker declaring bankruptcy, though it posted a $7.7 billion 2008 loss last week--even more than General Motors.

Although Toyota has a lineup that most car buyers would find attractive in a recession, from the Prius and the practical Camry and Corolla to the Yaris, the market has been so bad that people aren't buying anything: Toyota had 100 days of unsold inventory at the end of last year. A shutdown of North American plants cut that to 60 days in April, but it's still a lot for a company used to having waiting lists for popular models (including the Prius).

As the New York Times reported, Japanese automakers have also had to contend with the "buy American" sentiment that reared up with the recession and is echoed in the Obama White House. Toyota Vice President Josephine S. Cooper told the Times, "We have to recognize that we are on a different footing and we are standing on our own. Some of our competitors have another ally that we can't call upon in the same way."

Toyota's U.S. sales in April were down 42 percent compared to last year, and Lexus was down 39 percent. Year to date, sales have dropped 38 percent. The results are roughly comparable to Nissan--down 38 percent in April, too--but worse than Honda (down 24.5 percent) and Subaru (down 6.7 percent after some good months).

Europe was not an April bright spot for Toyota, either: the company sold 57,774 cars, down 22 percent. For the fiscal year ending March 31, 2010, Toyota is projecting sales of 6.5 million cars and trucks, down more than a million from fiscal 2009 "due to continuance of the current severe conditions of each market." It projects an operating loss of 850 billion yen ($8.8 billion) in that period.

Toyota Motor Corp. President Katsuaki Watanabe is looking on the bright side: "It appears to take some more time before the financial markets in the U.S. and Europe normalize and the global economy recovers. However, in the 2010 fiscal year, we plan to accelerate our profit improvement activities including the expansion of our hybrid vehicle line-up such as the next-generation Prius in May and the Lexus HS250h in July. All totaled, we plan to launch four hybrid models in Japan and three models overseas within this fiscal year. Through the reduction of variable and fixed costs, we estimate our total profit improvement in fiscal year 2010 will be around 800 billion yen [$8.3 billion]."

The Prius is being kicked off with a marketing campaign that emphasizes "harmony between man, nature and machine." Here's a flower-bedecked commercial: