Toyota Forecasts First Operating Loss in 71 Years

It's a world wide problem. Public Radio International's The World had a report today. Toyota is considering its options.

 

Demand is down one third across the board, across all motor manufacturers. They're being hit very hard with a lot of unsold inventory.

That said, Toyota have made profits in successive previous years so can weather a bit of a demand drop, although they will probably have to cut staff.

The Big 3 are in a huge mess because they were making operating losses through the boom times, but holding themselves up with ever increasing loans. Now they can't repay those loans. Ironically the European divisions - which do generally produce more efficient and better-built cars - have actually made large profits but those have been swamped by the huge losses in North American operations.

 

If this lasts past the end of February.................D-E-P-R-E-S-S-I-O-N.

 

Toyota to post first ever operating loss

By Pablo Elizalde

Toyota, the world's biggest car maker, has forecast its first ever operating loss due to the slide in car sales across the world.
The Japanese manufacturer has cut its group operating forecast to a loss of $1.7 billion for the year to end-March.
Toyota had made a record operating profit of $25.2 billion last year.
"This is very, very, very bad," Koichi Ogawa, chief portfolio manager at Daiwa SB Investments, told Reuters. "There's a chance they could fall into the red in the next business year as well.
"This is also not just a problem for Toyota. What is good for Toyota is good for the Japanese economy."
Honda, who pulled out of Formula One earlier, had cut its annual profit forecast by 67 percent last month.
Toyota has insisted that it remains committed to Formula One despite the global crisis and team president John Howett said he is not concerned about the situation.
"Clearly I guess everybody, not only motorsport teams but in all sports, faced with the financial turmoil at the moment, is managing their business correctly , but I don't think we are living hand-in-mouth or from day-to-day," Howett told BBC Radio 5 Live.
He is also confident the new cost-cutting measures agreed by the teams will help reduce budgets significantly.
"I think it is a very pragmatic approach that will allow all teams to reduce costs significantly, the DNA of F1 is retained and the intention of FOTA is to continue in the early part of next year once the initial wave of improvements have been introduced to look at further changes," he added.
Formula One tyre supplier Bridgestone also said on Monday that it was cutting its operating profit forecast for 2008 by 24 percent.
>>>>
Toyota Corp and other Japanese corporation has targeted Yen/Dollar exchange rate around 100 Yen per Dollar. Toyota alone exports its majority of cars to the US of A
and each _Yen_ appretiation against the Dollar, Toyota's revenue suffers to the tune of $40 million per each _Yen fluctuation. So the Yen is hovering around 89~ 90 Yen to the dollar... Toyota made over 25 Billion dollar last year so the loss of $1.7 billion this year still is not so bad.. Toyota will make profit despite global economics melt down. Ironically, Toyota has resumed the production of "Gas gusslers" Tundra and Sequoia, in the states ! ?

 

well they are predicting it to last more, as their fiscal year ends March 31st ... so their FY 2008 will include at least 6-7 months of economy downturn...

 

Psychologists have an interesting take on ... shall we say, 'nay-sayers'. It goes something like this:
"Well I can tell you right now, X (X being some sort of bad thing, whether housing costs, aunt millie staying an extra day, etc) will positively happen ... just you wait & see". So if the bad thing happens, the "gloom&doomer" gets to say, "see? I'm right". All the while knowing that if good happens instead of gloom & doom, everyone is so happy that good happened, that folks don't tend to remember what the nay sayer forcasted. It's a win/win for that kind of mentality ... so the psychologists say.

I don't know why, but something just made me remember that. On a positive note, there are lots of folks who triumph in hard times ... always looking for oportunity ... so keep an open eye.

 

Hill, if you knew me in life I am anything but a naysayer. I am just saying if demand for goods does not recover by the end of February the die will be cast. The state of the economy is very serious and is still spiraling down.

 

Now you know why I started stocking my hobbyfarm +2 years ago. If nothing happens, you can laugh at me.

 

It's only fair to point out that while there is a lot of reason to worry about the future, there are a lot of smart people making smart decisions underneath the economic radar.

Two examples from the past:
1) The "certain" food shortages of the 70s averted by the Green Revolution, the result of a limited number of dedicated individuals who's names are not recognized.
2) The "unstoppable" destruction of the Ozone layer solved by many well coordinated actions, technical and economic. Again, the result of many hidden heros.

With big three US automakers getting all the attention, the little, insignificant, not worth mentioning, too small to matter, etc. of companies like Tesla, Hymotion, and who knows who else.....will make a BIG difference in a few years. Note how Space-X has gone from a small outfit to becoming one of the major rocket companies of the world.

Already, the solar electric industry is ramping up fast. The wind power industry is getting significant.

 

Update: The loss forecast has grown. One says $3.9 billion for the year thru March and the other says $5 billion.

Toyota sees first annual net loss since 1950 - Yahoo! Finance
http://www.marketwatch.com/news/story/toyota-warns-5-billion-fiscal/story.aspx?guid={53DF3673-D299-4EA3-829F-C9E8827A2819}&siteid=yhoof

Ouch!