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August 5, 2009 > Toyota battered by slump, banks on green cars

Toyota battered by slump, banks on green cars

By Yuri Kageyama, AP Business Writer

TOKYO (AP), Jul 31 _ Toyota Motor Corp., the world's top automaker, reports earnings for the fiscal first quarter on Aug. 4. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Toyota is battling its worst crisis since being founded in 1937. It's in such serious trouble that it is moving toward closing a major auto assembly plant for the first time ever _ a joint venture with General Motors Corp., the New United Motor Manufacturing Inc., or NUMMI, based in Fremont, Calif. Recently released earnings at Honda Motor Co. and other Japanese automakers show inventory adjustments and cost cuts tackled since late last year are producing good results, boosting some optimism about Toyota's results. Toyota also has one bright spot with the popularity of the new Prius gas-electric hybrid, which underscores its image as a leader in that green technology. Japanese government ecological perks such as tax breaks have helped ease the plunge in sales, and the Prius has been the top-selling car in Japan for two months straight. Toyota is turning to the charisma of its founding family in the form of new president Akio Toyoda, the founder's grandson, who took office in June. Toyoda has yet to give details but appointed executives to oversee each key global region so Toyoda doesn't get bogged down in managing from the center of its empire.

BY THE NUMBERS: Toyota posted a bigger-than-expected 436.94 billion yen ($4.6 billion) loss for the fiscal year ended March 31, its worst red ink ever. It is forecasting a larger loss of 550 billion yen ($5.8 billion) for the fiscal year through March 2010. Analysts surveyed by Thomson Reuters are forecasting a 311.9 billion yen ($3.3 billion) loss for Toyota for the fiscal year through March 2010, and a loss of 280.3 billion yen ($2.95 billion) for the first quarter. Last year, Toyota dethroned General Motors Corp. as the world's No. 1 automaker in global vehicle sales, a position Detroit-based GM held for 77 years. Toyota kept that spot for the first half of this year, despite seeing a 26 percent drop in its global vehicle sales to 3.56 million vehicles, outselling GM by about 10,000 vehicles.

ANALYST TAKE: Tsuyoshi Mochimaru, auto analyst at Barclays Capital Japan in Tokyo, said the better-than-expected results at Honda and Nissan Motor Co. may herald good news at Toyota. But he wasn't as optimistic, noting that Toyota is more prone to being hit harder by the industry slump because of its sheer size, and had been on a more aggressive growth track than its rivals. ``It's natural that the market is going to expect a similar trend at Toyota,'' he said. ``But I'm not so sure operating profitability is going to be that strong at Toyota.''

WHAT'S AHEAD: Before the global financial crisis hit last year, Toyota looked as though it was doing almost everything right in boosting sales and solidifying its reputation. Although hopes are high in the industry for a turnaround in the U.S. auto market, the Japanese are looking for the next stage of growth in emerging markets such as India and China, which are proving more durable against the financial crisis. China for the first time surpassed the U.S. as the world's biggest auto market in the first half of this year. Toyota is also expanding its hybrid offerings, but competition is certain to intensify as rivals around the world are also developing hybrids and electric vehicles.

STOCK PERFORMANCE: Toyota stock was at 3,990 yen ($42) Friday in Tokyo, up 1.5 percent. The shares had lost nearly half their value over the last year before recouping some of the losses in recent sessions.

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