Poor sales in the US, Europe, and slowing growth in emerging markets, the increasing cost of raw materials, unstable oil prices, a strong yen and the US credit crisis have forced Toyota to drop its net income forecast to around a third of what it was last year.
?Currently, the financial crisis is negatively impacting the real economy worldwide, and the automotive markets, especially in developed countries, are contracting rapidly,? Toyota executive vice president Mitsuo Kinoshita said.
?This is an unprecedented situation. Negative results are largely due to the appreciation of the yen and the decline in vehicle sales under difficult market conditions in the US and Europe.?
Toyota's new earnings forecast puts net income for this financial year to a mere ?550 billion ($8.52 billion AUD), a drop of 68 per cent over the previous year. Total revenue is expected to shrink by 12.5 percent to ?23 trillion ($356 billion AUD), and Toyota is bracing itself for a drop in sales of around 673 thousand vehicles.
Toyota's plan to counter a further downturn in sales is to increase development of hybrid vehicles and adjust current pricing.
?We are aiming to increase our vehicle sales and profits by launching attractive products, stimulating market demand and revising pricing,? said Toyota's Sendior Managing Director Takahiko Ijichi.
Things could be worse though. Though the car-selling juggernaut that is Toyota has shown it isn't impervious to the current economic squeeze, it's still posting a fairly healthy profit - which is more than can be said for most car makers, let alone the struggling US giants.
Sure, it's nowhere near the profits Toyota banked last year, but at least the Japanese manufacturer hasn't been reduced to sleeping under railway bridges and begging for government rescue packages. Yet.