Mike Stevens | May 11, 2009

It’s been one hell of a ride for Toyota in the last couple of years. Prior to 'the great economic unpleasantness', the Japanese automaker had positioned itself securely as the number one car company in the world and the poster-child for profitability.

Toyota, however, hasn’t managed to avoid the global recession and massive shake-up in world financial markets and last year posted its first operational loss in over 70 years.

It has now announced a US$6.9 billion (AU$9 billion) loss for the January-March quarter and a forecast annual loss of US$8.6 billion (AU$11.2 billion).

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While the industry is awash with red ink, few analysts expected such a dramatic turnaround of fortunes for Toyota. Prior to the company's reported loss last year, Toyota was experiencing rapid growth.

As a result of the sharp downturn, sales are expected to be down 14 percent for the 2009/2010 financial year. Already one third of Toyota’s 74 global assembly lines have been cut back to working a single shift in an attempt to reduce costs and match production and inventories with sales. Expansion projects are also to be delayed until showroom demand recovers.

Along with Toyota’s losses, Fuji Heavy Industries, the company that builds Subaru of which Toyota owns a 16.5 percent stake, also reported a ¥5.8 billion (AU$76 million) loss for the quarter. Those losses are expected to reach around ¥35 billion (AU$461 million).

Toyota will have its hopes pinned on the new third-generation Prius to help spur sales along. While a single model isn’t enough to carry the company, it is hoped that the green image and sharpened pricing of the new Pruis will bring customers back to Toyota showrooms.

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