Yes, we are living THOSE times. Less than one our ago Toyota announced that it will make in the last quarter an operating loss of 150 billion yen ($1,65 billion loss). This would mean that its total 2008 net profit forecast would go down by 91% to 50 billion yen ($556 million) from 550 billion yen.
Toyota is by no means outside the normal trend in the auto industry. Even its recent declarations show that the Toyota executives were too optimistic (if not innocent) about the crisis. Toyota said the dismal forecasts came “in response to the unexpected degree of the slowdown in the automotive market, and the revision of the assumed exchange rates in response to further appreciation of the yen.”
Paradoxically, we at doitinvest.com think that for the first time in the last year the US native car producers, such as GM, might be ahead of the curve – and definitely ahead of Toyota. They already started taking measures which Toyota is only now contemplating, whilst the Japanese are scratching their head. The fact that the US car producers faced the crisis much earlier that its Japanese counterparts might give them a time advantage.
For example General Motors already started to close plants in order to slash costs. Its closing of the Ohio plant (this Tuesday) will leave 1,080 workers idle and would create problems which is likely to make it un popular with the local communities and authorities. So far this year, GM alone has announced 11,000 U.S. layoffs. Other GM plants could soon be facing a similar fate. In Janesville, Wis., GM will cease making SUVs on Tuesday, putting 1,200 workers out of work. The plant will stay open until June to produce trucks along with Isuzu, but only about 50 workers will remain employed for that.
The White House threw GM and Chrysler LLC a lifeline on Friday, offering $17.4 billion in rescue loans. On Sunday, Vice President Dick Cheney said the White House was forced to step in to save the companies after Congress failed to bail them out.But the automakers must prove their viability by March 31.
Ford also reported massive layoffs, which of course will make the Japanese cars less attractive for the potential buyers. Citing slow sales, Ford (NYSE: F) said it would keep 10 of its plants closed for an extra week in January, according to the story. The company’s Sharonville transmission plant will not be closed for the extended period, Ford said.
All in all, not so good news from the markets. But with the recession already in, what could one expect?