Toyota posts first loss, sees worse ahead ......
05-08-09, 05:47 AM
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Toyota posts first loss, sees worse ahead ......
Toyota posts first loss, sees worse ahead
TOKYO (AFP) - 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.
TOKYO (AFP) - 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.
lol
05-08-09, 06:12 PM
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I have been predicting this for a while. The current line up of Toyota cars in mediocre at best.
1. You have very poor sales of the Tundra/Sequoia with waaay to much capacity which is just burning money.
2. High end Lexus products such as the LS and GS are not moving
3. Aging SC line which is eating away at profits.
4. Not sports cars to compete with Nissan GT-R, Camaro, Genesis Coupe.
5. 4runner/GX/FJ is getting old.
6. ES line that should be sold at Wal-Mart....Motor Trend called the ES the Wal-Mart of luxury cars.
7. Honda under cutting the Prius on pricing. Say goodbye to high profits.
I hate to be mean but this the writing on the wall. Write Hyundai is showing growth and moving cars which means they have evolved. I would like to see Toyota do this.
1. You have very poor sales of the Tundra/Sequoia with waaay to much capacity which is just burning money.
2. High end Lexus products such as the LS and GS are not moving
3. Aging SC line which is eating away at profits.
4. Not sports cars to compete with Nissan GT-R, Camaro, Genesis Coupe.
5. 4runner/GX/FJ is getting old.
6. ES line that should be sold at Wal-Mart....Motor Trend called the ES the Wal-Mart of luxury cars.
7. Honda under cutting the Prius on pricing. Say goodbye to high profits.
I hate to be mean but this the writing on the wall. Write Hyundai is showing growth and moving cars which means they have evolved. I would like to see Toyota do this.
05-08-09, 07:39 PM
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Yes, and people need to remember scale here. When you deal with the most volume, you are likely to see the largest dollar drop during times like these and the biggest dollar gains during prosperous times. Percentage wise, Toyota isn't at all in the worse shape. They still sell the most cars. They're simply structured to sell a lot more. And as the article points out, the yen is now stronger which effects them at no fault of there own. Plus the raw material cost hikes.
Last edited by -J-P-L-; 05-08-09 at 07:54 PM.
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05-08-09, 07:49 PM
#8
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I have been predicting this for a while. The current line up of Toyota cars in mediocre at best.
1. You have very poor sales of the Tundra/Sequoia with waaay to much capacity which is just burning money.
2. High end Lexus products such as the LS and GS are not moving
3. Aging SC line which is eating away at profits.
4. Not sports cars to compete with Nissan GT-R, Camaro, Genesis Coupe.
5. 4runner/GX/FJ is getting old.
6. ES line that should be sold at Wal-Mart....Motor Trend called the ES the Wal-Mart of luxury cars.
7. Honda under cutting the Prius on pricing. Say goodbye to high profits.
I hate to be mean but this the writing on the wall. Write Hyundai is showing growth and moving cars which means they have evolved. I would like to see Toyota do this.
1. You have very poor sales of the Tundra/Sequoia with waaay to much capacity which is just burning money.
2. High end Lexus products such as the LS and GS are not moving
3. Aging SC line which is eating away at profits.
4. Not sports cars to compete with Nissan GT-R, Camaro, Genesis Coupe.
5. 4runner/GX/FJ is getting old.
6. ES line that should be sold at Wal-Mart....Motor Trend called the ES the Wal-Mart of luxury cars.
7. Honda under cutting the Prius on pricing. Say goodbye to high profits.
I hate to be mean but this the writing on the wall. Write Hyundai is showing growth and moving cars which means they have evolved. I would like to see Toyota do this.
2. LS is fine, GS is hurting.
3. No its not b/c it did its job initially. Its not counted on to bring in profits its a 7 year old car.
4. Sports cars don't make money. If they do its very little. Only high end brands make money selling sports cars. Otherwise they better share TONS of parts ala Nissan.
5. Not a huge seller anyway
6. Ridiculous. Everyone shops at Wal-Mart. The ES is their best selling sedan. WTF would they get rid of it now.
7. Is ridiculous. Please read this.
http://www.greencarcongress.com/2009...n-hybrids.html
"The Nikkei reports that Toyota and Honda are both making estimated profits of about ¥300,000 (about US$3,100) each on every hybrid they sell, similar to what they make on small, gasoline-engined vehicles.
If Honda sells 200,000 Insight hybrids worldwide in the first year of its release, the company would generate sales of more than 350 billion yen [US$3.6 billion]. Since it estimates a gross profit margin of more than 15% on the car—priced at under 2 million yen&mash;its gross profit on Insight sales is projected to hit around 60 billion yen [US$622 million] in the first year, or around 300,000 yen per unit.
The gross profit earned on the Insight is still low when factoring in the large R&D costs involved in its development. However, the profit margin on its hybrid operations has risen to the level where Honda can count on it to generate the fourth-largest revenue stream behind its luxury, midsize and small car operations.
The Nikkei report said that Toyota appears to have earned gross profits of around ¥100 billion yen (US$1 billion) on its sales of second-generation Prius hybrids last year. Toyota’s gross profit margin on the sales of the next-generation 2010 Prius are projected to be in the single digits in the first year."
Really start to do some research before making these statements. They don't add up or make much any sense.
05-08-09, 07:52 PM
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Thus proclaiming that the Insight is a "Prius killer".
And yet the reverse happens when the Fit, for example, when compared with it's competition which are all cheaper (Yaris, Accent, Versa, ect.). The Fit is generally more than 15% more than those cars but is always awarded as the best sub-compact. Is it a surprise that the more expensive car is the best?
Go figure. Honda can't lose.
Can we start judging cars for their merits AND price together. There's usually a reason one car is more expensive than the other.
05-08-09, 08:14 PM
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Factories are an extremely complex operation. They attempt to forecast sales but the economy and market conditions change faster than they can adjust.
Plus. You have to think about the workers, ect. It's not easy to hire and fire and hire again with every month to month swing of the market.
There's so much other issues too but it would take a book to explain.
05-08-09, 08:41 PM
#12
Lexus Test Driver
true.........but companies like Yota and the other big three Japos are better leveraged than the imbiciles over at GM and Ford because of the corrupt UAW.........Japos don't act like mafia badboys when it comes to labor agreements!
............the end is near!
............the end is near!
05-08-09, 10:51 PM
#13
Lexus Champion
I have been predicting this for a while. The current line up of Toyota cars in mediocre at best.
1. You have very poor sales of the Tundra/Sequoia with waaay to much capacity which is just burning money.
2. High end Lexus products such as the LS and GS are not moving
3. Aging SC line which is eating away at profits.
4. Not sports cars to compete with Nissan GT-R, Camaro, Genesis Coupe.
5. 4runner/GX/FJ is getting old.
6. ES line that should be sold at Wal-Mart....Motor Trend called the ES the Wal-Mart of luxury cars.
7. Honda under cutting the Prius on pricing. Say goodbye to high profits.
I hate to be mean but this the writing on the wall. Write Hyundai is showing growth and moving cars which means they have evolved. I would like to see Toyota do this.
1. You have very poor sales of the Tundra/Sequoia with waaay to much capacity which is just burning money.
2. High end Lexus products such as the LS and GS are not moving
3. Aging SC line which is eating away at profits.
4. Not sports cars to compete with Nissan GT-R, Camaro, Genesis Coupe.
5. 4runner/GX/FJ is getting old.
6. ES line that should be sold at Wal-Mart....Motor Trend called the ES the Wal-Mart of luxury cars.
7. Honda under cutting the Prius on pricing. Say goodbye to high profits.
I hate to be mean but this the writing on the wall. Write Hyundai is showing growth and moving cars which means they have evolved. I would like to see Toyota do this.
2. I agree that the GS needs an update that will blow the E and 5 away. But quit talking out of your azz in regards to the LS.
Have you looked at sales recently?December....S-Class 1075....7-series 37 (?)....LS 1451.
January....S-Class 516....7-series 23 (Huh?)....LS 904.
February....S-Class 985....7-series 10 (WTF?)....LS 700.
March....S-Class 731....7-series 917....LS 852.
So for the past 4 months it stands for the flagship vehicles:
Benz 3307....7-series a ridiculous 988....and the LS a class leading 3907.
3. How does an existing line like the SC eat profits? The line and outsourcing is already established so production costs are fixed. If they were to introduce a new model/line that would require a new set up THEN they would be burning profit.
4. There are only a handful of cars that can compete with the GT-R and most of them start north of $100K. The IS 350 "competes" with the weak Camaro and the over-hyped Genesis. The F walks all over these two and, at least, competes with the established super sedans of the other marquee luxury brands.
5. Granted they are getting old and need a refresh/redesign.
6. I, personally, agree that the ES is not of the highest standard. However, it is a great seller and appeals to many buyers. How do you consider this vehicle a negative in this thread when it is one of Toyota/Lexus' highest volume, highest profit vehicles?
The fact that you consider it "Wal-Mart low end" doesn't change that it is a positive vehicle profit wise. 7. We'll see. Honda also over prices other of their entry vehicles. I recently picked up a Yaris for my business and cross shopped an Insight. Not only did they want slightly more money for the Honda....they also wanted 6% higher to finance it. Pricing it lower doesn't make a difference if the finance rates are ridiculous as most people choose some form of financing. (And btw, the Yaris became a no-brainer when Toyota through in an additional $2500 discount for a cash purchase!).
Your "predictions" are not based on any kind of facts....try reality!
05-08-09, 11:34 PM
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2. I agree that the GS needs an update that will blow the E and 5 away. But quit talking out of your azz in regards to the LS. Have you looked at sales recently?
December....S-Class 1075....7-series 37 (?)....LS 1451.
January....S-Class 516....7-series 23 (Huh?)....LS 904.
February....S-Class 985....7-series 10 (WTF?)....LS 700.
March....S-Class 731....7-series 917....LS 852.
So for the past 4 months it stands for the flagship vehicles:
Benz 3307....7-series a ridiculous 988....and the LS a class leading 3907.
Have you looked at sales recently?December....S-Class 1075....7-series 37 (?)....LS 1451.
January....S-Class 516....7-series 23 (Huh?)....LS 904.
February....S-Class 985....7-series 10 (WTF?)....LS 700.
March....S-Class 731....7-series 917....LS 852.
So for the past 4 months it stands for the flagship vehicles:
Benz 3307....7-series a ridiculous 988....and the LS a class leading 3907.
[3. How does an existing line like the SC eat profits? The line and outsourcing is already established so production costs are fixed. If they were to introduce a new model/line that would require a new set up THEN they would be burning profit.
4. There are only a handful of cars that can compete with the GT-R and most of them start north of $100K. The IS 350 "competes" with the weak Camaro and the over-hyped Genesis. The F walks all over these two and, at least, competes with the established super sedans of the other marquee luxury brands.
For every Genesis coupe sale or GT-R or 300Z sale...there is no Supra or Toyota sale. With a Supra model, Toyota could afford to make a new SC model or GS coupe which could share the costs. Right now there is no reason for any Genesis, GT-R, 300Z buyer to ever consider stopping at Toyota/Lexus dealer....
5. Granted they are getting old and need a refresh/redesign.
6. I, personally, agree that the ES is not of the highest standard. However, it is a great seller and appeals to many buyers. How do you consider this vehicle a negative in this thread when it is one of Toyota/Lexus' highest volume, highest profit vehicles? The fact that you consider it "Wal-Mart low end" doesn't change that it is a positive vehicle profit wise.
The fact that you consider it "Wal-Mart low end" doesn't change that it is a positive vehicle profit wise.
I don't think so. The ES can be had for so cheap these days that the profit per car has taking a hit. Toyota's largest profit margins come from their trucks and Suvs followed by very high end Lexus models. The highest profit margin vehicles like the Tundra/Sequioa/LS/GS/LX are down big time. You can now get up to $10,000 off a brand new Land Cruiser.
7. We'll see. Honda also over prices other of their entry vehicles. I recently picked up a Yaris for my business and cross shopped an Insight. Not only did they want slightly more money for the Honda....they also wanted 6% higher to finance it. Pricing it lower doesn't make a difference if the finance rates are ridiculous as most people choose some form of financing. (And btw, the Yaris became a no-brainer when Toyota through in an additional $2500 discount for a cash purchase!).
Toyota is losing money because of way too much capacity without downsizing. An outdated product line of 7 year cycles for the SC and 4runner/GX. Lexus models are selling slower than ever with a greater decline than industry average and increase competition from Hyundai, Nissan and Honda.
05-08-09, 11:49 PM
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They do to a point, but it's not that simple.
Factories are an extremely complex operation. They attempt to forecast sales but the economy and market conditions change faster than they can adjust.
Plus. You have to think about the workers, ect. It's not easy to hire and fire and hire again with every month to month swing of the market.
There's so much other issues too but it would take a book to explain.
Factories are an extremely complex operation. They attempt to forecast sales but the economy and market conditions change faster than they can adjust.
Plus. You have to think about the workers, ect. It's not easy to hire and fire and hire again with every month to month swing of the market.
There's so much other issues too but it would take a book to explain.
1st gen Tundra/Sequioa sold a combined 160K units per year from 2000-2003. All major powertrain components were made in Japan on the LC/LX line. Toyota shipped the components to Indiana for installation. The advantage of this was Toyota could keep a plant in Japan that makes the 4.7 engine operating a max/peak efficiency.
fast forward to...
late 1st gen/2nd gen Tundra 2004-2009 models. Toyota starts building the 4.7 in a new plant in Alabama. This plant is the sole source for 4.7 engines for the Tundra/Sequioa. Toyota shift the excess 4.7 capacity in Japan to 4runner/GX models for export to North America. Toyota is now selling more engines and can support the engine plant in the USA
Then the 2nd gen Tundra disaster hit. 400k capacity in Texas/Indiana. Toyota starts making the 4.7 and 5.7 in Alabama. Everything is going well in early 2007 when all of a sudden the economy starts tanking and Toyota can't sell all the Tundra's that they are making.
Toyota once spent billions to make the Texas plant and retooled the Indiana plant now has to reconfigure the Indiana plant for Sequoia only production, idle the Texas plant for a few months which then in turn idles the Alabama plant engine plant.
So all of a sudden. Toyota now has all this manufacturing capacity, employees, cost etc when they are not selling anymore Tundra/Sequoias than they did when the Japan plant was the source for major components. Toyota is now selling less Tundra/Sequoia per year than they did in the past.
Toyota's biggest problem right now is that they cannot sell their cars/trucks for the same profit margin as they did in the past. Smart companies downsize yet keep their profit margins the same. This is not the case for Toyota. Toyota has kept their manufacturing capability the same while also losing the big profit margins.
Last edited by pagemaster; 05-08-09 at 11:56 PM.