Everybody Hurts

Toyota loses money for the first time in 71 years:

Toyota Motor Corp., the world’s second-largest automaker, forecast its first operating loss in 71 years on plummeting demand, prompting Moody’s Investors Service to consider downgrading the company’s top-rated credit.

The carmaker will post a 150 billion yen ($1.7 billion) loss in the year through March, it said in a statement today, scrapping a previous forecast of a 600 billion yen profit.

“The environment we’re in is extremely tough,” President Katsuaki Watanabe told reporters today in Nagoya. “We’re facing an unprecedented emergency situation. Unfortunately, we can’t see the bottom.”

[...]

The carmaker’s sales in the U.S., traditionally its most profitable market, plunged 34 percent in November. Toyota’s European sales dropped 34 percent last month, according to the European Automobile Manufacturers Association in Brussels.

Other Japanese manufacturers are feeling the pinch, too:

Honda Motor Co., Toyota’s closest domestic rival, slashed its earnings forecasts this month after the yen’s 25 percent gain against the dollar this year. Suzuki Motor Corp., Japan’s second largest minicar maker, today said it will cut domestic production by an additional 30,000 units to 1.16 million vehicles for the year ending March 31. Daihatsu Motor Co., Toyota’s minicar unit, said it will cut Japan production by 16,000 vehicles in the period.

Japan’s exports plunged 26.7 percent last month from a year ago, the most on record, as global demand for cars and electronics collapsed. Shipments to the U.S. slid an unprecedented 34 percent, the Finance Ministry said.

“Japan’s economy has never weaned itself off of the overbearing reliance on exports, and especially to the U.S.,” said Kirby Daley, senior strategist and head of capital introductions at Newedge Group. “Japan did nothing to prepare itself” for the collapse in demand from abroad.

Detroit's problem isn't that it's "building cars no one wants to buy," but that no one wants to buy anything these days. Toyota, at least, can still borrow money to keep going - for now:

Moody’s is reviewing the carmaker’s “Aaa” rating on $19 billion of debt, possibly boosting the company’s borrowing costs amid tightening credit markets and the worst U.S. auto sales in 26 years. ...

Damian P.

Posted by damian at December 22, 2008 08:16 AM