1fastdog

"Toyota Motor, the world's top automaker, announced Friday a 4.4-billion dollar annual loss, its first ever, and warned it would plunge deeper into the red as car sales collapse during the recession.
Toyota lost 765.8 billion yen (7.7 billion dollars) in the quarter to March alone, even more than General Motors, as it idled plants to ride out the biggest crisis in its more than 70-year history.


Company president Katsuaki Watanabe blamed the weak performance on a slump in vehicle sales, particularly in the United States and Europe, as well as a stronger yen and higher raw material costs.

For the business year to March, the group made a net loss of 436.9 billion yen (4.4 billion dollars), worse than its own forecast and a dramatic turnaround from the previous year's record profit of 1.72 trillion yen.

It is the first time that Toyota has finished a year in the red since it started publishing results in 1941.

The company, which dethroned General Motors last year as the world's number one carmaker, logged an annual operating loss of 461.0 billion yen, against a year-earlier profit of 2.27 trillion yen. Revenue slumped 21.9 percent.

The company has actively expanded its global production facilities in recent years to meet brisk demand, particularly for its fuel-efficient cars, leaving it vulnerable to the current collapse in worldwide sales.

The Japanese maker's global sales fell 15 percent to 7.57 million vehicles last year.

It expects an even worse performance in the current business year to March -- a net loss of 550 billion yen and an operating loss of 850 billion yen. Vehicle sales are expected to sink to 6.5 million.

"We believe the current difficulty will persist for a while," said Watanabe, who will soon be replaced by Akio Toyoda, the grandson of the automaker's founder.

While the Chinese and Indian markets are showing signs of recovery, the outlook for most of the world remains uncertain, he said.

The company plans to expand its line up of fuel-sipping hybrid cars and cut costs as part of efforts to return to profit.

Toyota fared even worse in the quarter to March than General Motors, which said Thursday it lost six billion dollars.

The Japanese company has idled plants and slashed thousands of temporary jobs in response to its biggest ever crisis.

Industry analysts say the new president, Toyoda, will probably have to announce more drastic steps when he takes over.

The founder's grandson is seen as someone who can unite the company during the current crisis and take some 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 Friday to overhaul its operations but said it aimed to reduce costs by 800 billion yen this year.

Further evidence of the industry's woes came from tyre maker Bridgestone, which announced a net loss of 34.9 billion yen for the three months to March, the first quarter of its business year."

JakeRobb

I'm torn on this news.

I don't want anyone in the auto industry to suffer, but maybe this will help remove Toyota's undeserved halo of high public opinion.

El Duce

How is it "undeserved?" Look at JD Power, Consumer Reports, etc. Some of the praise heaped upon them in particular stories was underserved, but lets not kid ourselves and act like the products GM was putting out over the last 20 years were on par.

1fastdog

If only.

Some will undoubtedly blame George Bush, AIG, and hedgefunds for Toyota's problems...:

The bottom line is too many cars, too few buyers.

Toyota can cut production without the costs the domestics have to consider.

There is some chance of "loss of face" in this. Not the loss of face the Chinese would refer to a "lian" but rather what they would call "mianzi".

Chuck!

That's a lot of pressure on Akio. I wonder if he'll reverse the trend of trying to make Toyota seem American.

JakeRobb

I don't know how JD Power does their surveys, but Consumer Reports only surveys subscribers, so they are in effect a self-fulfilling prophecy. The people responding to the survey about their opinion on Toyota are the same people who bought a Toyota based on CR's past recommendation and who love their Toyota because CR told them it's the best.

Of those people who have an opinion about Toyota at all, the majority of them think that Toyota makes perfect, flawless cars that get the best gas mileage, have the highest quality, have the best safety ratings, never need recalls, etc etc.

This is true regardless of what GM was doing 20 years ago.

So, their halo of high public opinion is undeserved for a couple of reasons:

First, Toyotas don't necessarily get the highest gas mileage, don't necessarily have the highest quality, etc. I'm sure there are some cases where Toyota's entry tops the charts in a legitimate way, but didn't we all just read the news about Equinox getting 32mpg highway, while RAV4 gets 28? And haven't we all read about all of the quality issues Tundra owners are having, on things that Silverado/F150/Ram owners have taken for granted for decades?

Second, as I described above, Consumer Reports results don't tell the whole story. Worse, their subscribers either don't know or don't care. Regardless, CR's ratings are often used in marketing materials, and so they reach an even broader audience than CR's subscriber base (which is already quite large). Basically, it only takes one positive review in CR, plus some time for the opinion to spread among its subscribers, and eventually the whole world will be convinced that the product in question is the best, hands down, even years after the initial positive review.

El Duce

Well all that is quite obvious, but the perception (even if inflated) is a result of the facts on the ground. Are they perfect? . . . absolutely not. We know that as car guys, but 95% of people who drive cars aren't car people. The perception may not be accuracte, but it is reprentative of an overall trend, and I would think that most objective people could recognize that over the last 2 decades, Toyota tended to put out a superior product than its GM counterpart and to most of the other competition save maybe Honda. It's a lot like the NY Yankees. They have 26 world championships and everybody thinks they're the cat's meow, but people who actually watch baseball would note that over the last decade they haven't been all that. Perception matters. It may not be accurate, but much like stereotypes, they exist for a reason.

JakeRobb

The most recent stats out of Toyota indicate that their quality has been falling, slowly but steadily, for a couple of years.

GM and Toyota are treated like opposites. GM does something good, it gets swept under the rug. GM does something bad, public opinion reflects it immediately. Toyota does something good, everybody and their brother sings it from the mountaintops for the next forty years. Toyota does something bad, it gets swept under the rug.

Public opinion of GM (the products the build, not the company) is much more negative than they currently deserve, and public opinion of Toyota is much more positive than they currently deserve.

El Duce

It takes more than a few years to change 20+ years of bad car making. That, and the fact the we the taxpayers have given billions upon billions of dollars to them has plenty to do with the current perception, as well as it should. And that's not even going into the view that half of Americans have of unions, in particular the UAW.

Threxx

I've mentioned the whole 'self fulfilling prophecy' thing about CR in the past (in fact I think that's my line Jake used) but JD Power does their surveys right, at least in regards to the scope of their sample.

Toyota's rep is definitely NOT undeserved, even if it MIGHT be an inaccurate representation of present day offerings... that's whta reputations are all about. If a chick is a ***** her entire HS and college career and one day legitimately decides to come clean and stop sleeping around she can't really expect everyone to instantly recognize that face.

And right now while I agree Toyota's quality has been slipping on some products, it's certainly not slipping on all products, and right now I'm unconvinced that GM is really doing as good of a job of producing long term durable quality as I had been thinking and hoping during 2008 and early 2009. I'm seeing too many problems out of the cars that they've been wearing as the halos of their quality like the CTS and Aura. Those cars so far appear to be average, at best, for quality, even though they both (especially the CTS) appear very solidly made on the surface.

JakeRobb

The turnaround started, IMO, in ~2005 with the original CTS, among others. It was my hope that by now, people clinging to GM's bad reputation would be a large minority, rather than a large majority. How long should it take?

Note in my previous post that I specifically mentioned the perception of the product, not the company. It bugs me that people will ignore the merits of a product simply because they are unhappy with the corporate entity that produces them. I understand if they don't want to actually purchase the vehicles, but to go around spouting off about how they're inferior when they aren't is not cool, IMO.

Yeah, I borrowed your phrase. Very appropriately worded, IMO. Thanks for the feedback on JD Power.

Route66Wanderer

This is not an issue of quality or lack of it. This is simply a reflection of how truly horrible the automotive market is right now and any automaker loosing money is bad news all around.

Toyota will make it through the storm but the storm is certainly not over yet.

flowmotion

True, but Toyota arguably expanded way too fast. They have many new plants around the world that are under-utilized. Exhibit A is the Tundra plant in Texas.

(I blame the hedgefunds )

CaminoLS6

I'm very pleased that Toyota is taking a hit, I hope it gets worse for them rather than better.

bossco

The japanese government has given toyota billions upon billions as well to assist in the development of new technology, the same can be said for probably just about every major auto manufacturer in the world.

How is it something the rest of the world engages in on a regular basis is tantamount to kiddie snuff films here?