Toyota Cuts Outlook, Has No Exciting Car to Cancel
By Kevin Gordon
Toyota announced today that is will post an operating loss for the fiscal year 2009. This loss is a first in the companies 70 year history. Toyota Motor Corp., the largest company, by market cap in Japan, highlights how truly severe the troubles of the global economy are. When the ultra-competitive Godzilla of the auto industry is faltering, it hurts to think about the odds that the U.S. companies have to overcome to meet the conditions of the recent bailout.
Toyota’s President Katsuaki Watanabe spoke at a news conference today stating that the company would post an operating loss of 150 billion yen ($1.7 billion). This was the result of decreased demand in the U.S. and Europe, and the strength of the yen against the USD. This is the second time that Toyota has lowered their outlook and it is not only a bad omen for the auto industry, but for the economy of Japan.
Japan’s export levels have now dropped by the largest amount on record, driven by the lack of car sales to the rest of the world. This has all of the major Japanese auto manufactures warning that 2009 may be as bad, if not worse. Unlike Honda, Toyota did not have a deep and detailed list of things that they prepare to do in the near future to stop the bleeding. Instead, Toyota plans to resort to cost cutting and stopping all expansion projects. These projects include a reduction in temporary workers and postponing a new factory in Mississippi, where they planned to build the Prius hybrid. President Katsuaki Watanabe spoke today at a press conference in Nagoya. “We’re facing an unprecedented emergency situation. Unfortunately, we can’t see the bottom.”
These forecasts mean an expected loss in sales of over a million new vehicles in this fiscal year. Toyota expects to sell 7.54 million vehicles, down from the 8.9 million vehicles it sold last year. By far the largest percentage of decrease will come from the U.S., where it will lose 790,000 in sales. All of these factors represent a very rare Japanese trade deficit for the month of November.
As I pointed out in the headline, there is not an exciting future model that Toyota will not cut as a result of the downturn. Even with this being the case, I would expect that some of their forecasted new vehicles will be shelved, including the diesel version of the Tundra and possibly the concept FT-HS hybrid sport compact, AKA the future Supra. The loss of these smaller productions, enthusiast vehicles, is possibly the largest troubling component of the decay of the worldwide automotive industry.
There may be a larger issue for Toyota. When you see Ford legally able to advertise that it’s Fusion/Milan is higher quality and more reliable than Toyota’s tectonic Camry you have to wonder. Has Toyota turned the optimization screws to far? If you look at Consumer Reports (username required) the V6 Camry and V8 Tundra’s reliability are considered much worse than average. I would imagine this is one of those statistics that could win you a few pints at your local pub. Maybe there is no escaping the worldwide economic downturn, even for those manufactures that have been considered untouchable in the past. But maybe, just maybe, this opens the door for a new set of cars/companies to take a leadership role in future of the automotive world.
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