Toyota losses big... and it's not going to get any better!

Toyota Motor Corporation, the newly crowned king of the hill, the world's largest auto manufacturer announced it's first annual (calender) net loss since 1950. With worldwide demand for automobiles plummeting and the strength of the yen doomed the automakers earnings for 2008.

Toyota announced a quarterly loss of 164.7 billion yen ($1.8 billion US) for the October-December 2008 period, down from 458.6 billion yen profit for the same period in 2007, quarterly sales had dropped 28.4 percent in the period from year over year sales.

Toyota expects to announce an even wider loss for its fiscal year ending in March 2009, which it expects to be a net loss of 350 billion yen ($3.85 billion US), which is a dramatic turn of events from its record 1.72 trillion yen profit it had posted the previous year.

In dramatic fashion the company is announcing wide ranging cost cutting measures including, shutting down 11 plants in Japan for 14 days with other plant shutdowns expected, plans are being made to reduce contract workers. The company also is introducing new gas electric hybrid models as part of its turn around strategy and other model changes to strengthen its brand.

One of the biggest steps announced is that Akio Toyoda, a member of the founding family has been tapped as the incoming President of Toyota. Mr. Toyoda who has been a executive Vice President and who at 52 is widely considered young by Japanese standards for heading a major corporation. The move, as indicated by Toyota officials should bring employee ranks, dealerships and other group companies together during the tough times because of the nature of his families heritage with the company.

The outlook as I have reported does not look great for Toyota as the market is changing and they are suffering the same effects of being such a large player in a crowded field, it will take some time to right size the company to meet the slowing demand for automobiles. In addition with every major automaker bringing product to market to challenge Toyota's presence, they will be hard pressed to make the changes necessary over the course of 2009.

When you have a lowered worldwide demand for automobiles and you are the largest player, your business model was geared to producing a lot of vehicles. The product line up for Toyota has been geared towards Trucks and SUV's, and a whining demand for its perpetually popular Prius Hybrid makes for a disastrous recipe for the coming year.

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That Car Guy

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