Plunging sales in North America and Europe have prompted Toyota Motor Corporation to offer its gloomiest yet forecast, projecting an annual loss three times greater than earlier suggested.
At the same time it said it was looking to cut $5.5 billion in cost, including from its research and development and marketing budgets .
The world’s largest carmaker now says its first annual operating loss in seven decades will be ¥450 billion (US$4.95 billion) for the financial year that ends March 31.
The deteriorating outlook, included in a third-quarter report, comes just six weeks after Toyota scrapped a forecast for a fiscal year profit and projected a $1.65 billion operating loss.
The carmaker said it expects its global sales to tumble 17.87 per cent to 7.32 million units. That’s against December’s forecast of 7.54 million vehicles and last year’s tally of 8.91 million.
Toyota also will record its first annual net loss since 1950: $3.85 billion. That contrasts with last year’s $18.9 billion net profit.
Toyota’s US sales plunged 15.4 per cent in 2008 compared with 2007, while overall US sales fell 18.0 per cent. Last month, Toyota sales slipped an additional 31.7 per cent, while overall US sales collapsed 37.1 percent.
At the same time, the yen’s rapid surge against a weakening US dollar lopped billions more off company profits.
“As the business expanded, there may be certain issues we didn’t pay enough attention to,” Executive Vice President Mitsuo Kinoshita said, in a rare admission of business error, while announcing results.
The story for Toyota has been similar in Europe where the region recorded an operating loss of US$476.9 million (¥43.4 billion), wiping out a profit of US$373.6 million the year before. European sales shrank 23.7 per cent in the quarter to 235,000 units.
Mr Kinoshita said Toyota will try to reduce fixed costs by 10 per cent, mostly by stalling plans to build a Prius factory in Mississippi and set up car plants in China, India and Brazil.
Toyota also will cut spending on marketing and r&d.
Last month, Japan’s Nikkei newspaper reported that Toyota was considering the elimination of 1000 full-time jobs in North America and Britain.
Said Mr Kinoshita: “Outside of Japan, we intend to make every possible effort to protect the jobs of our employees.”