Japan’s Toyota Motor, the world’s largest vehicle manufacturer, yesterday announced its first annual loss and warned it would plunge deeper into the red this year because of the global economic downturn.
The firm expects a massive operating loss of about US$8.6 billion in the current business year to March, underlining the depth of turmoil in the global auto industry.
It reported an annual net loss of ¥436.9 billion (US$4.4 billion), worse than its own forecast and a dramatic turnaround from the previous year’s record profit of ¥1.72 trillion.
It is the first time that Toyota, founded 72 years ago, has finished a year in the red since it started publishing results in 1941.
The firm, which dethroned General Motors last year as world No. 1, logged an operating loss of ¥461.0 billion, against a year-earlier profit of ¥2.27 trillion. Revenue slumped 21.9 percent to ¥20.53 trillion.
Toyota president Katsuaki Watanabe blamed “the significant deterioration in vehicle sales, particularly in the US and Europe, the rapid appreciation of the yen against the US dollar and the euro and the sharp rise in raw materials.”
The Japanese maker’s global sales fell 15 percent to 7.57 million vehicles over the year.
The results from once-invincible Toyota underscore the depth of the crisis in the worldwide auto industry, which has been battered by a slump in sales as people stop buying cars during the recession.
It expects an even worse performance in the current business year to March, predicting a net loss of ¥550 billion and an operating loss of ¥850 billion.
The global economy is expected to take some time to recover, said Watanabe, who will soon be replaced by Akio Toyoda, the grandson of the automaker’s founder.
Watanabe said Toyota would expand its line up of fuel-sipping hybrid cars this year and cut costs as part of efforts to return to profit.
Toyota overtook General Motors last year to become the world’s top selling automaker, but only because the Detroit giant’s sales fell faster than its own.
The Japanese company has idled plants and slashed thousands of temporary jobs in response to its biggest-ever crisis.
Analysts say the new president will probably have to announce more drastic steps when he takes over. The founder’s grandson is seen as one who can unite the company during the current crisis and make tough decisions about its future.
Toyota may have to take painful steps such as closing plants and firing regular workers, something that may be easier for the family scion to do, said Credit Suisse auto analyst Koji Endo.
“The founding family is still regarded as a kind of symbol,” he said.
Toyota did not announce any new steps yesterday to overhaul its operations but said it aimed to reduce costs by ¥800 billion this year.