If misery loves company, Detroit's Big Three can welcome Toyota to the club.
The Japanese carmaker said Monday that it would report an annual operating loss for the first time in seven decades, underscoring the breadth of the auto industry's woes amid the global economic downturn -- and proving that even an envied giant such as Toyota Motor Corp. can make mistakes.
"It speaks volumes about the severity of the recession," said George Magliano, an industry analyst at IHS Global Insight. "Nobody's immune, and everybody's taking a hit right now."
Tight credit markets and slumping economies are keeping consumers out of showrooms and making it tough to find financing for those who do want to buy. Sales of cars, pickup trucks and sport utility vehicles fell almost 37% in the U.S. last month compared with November 2007 -- the worst monthly drop since January 1982.
Toyota's sales in the U.S. -- the carmaker's largest single market -- fell 34% last month and are down more than 13% this year.
"The change that has hit the world economy is of a critical scale that comes once in a hundred years," Toyota President Katsuaki Watanabe said at a news conference in Japan. The drop in vehicle sales over the last month was "far faster, wider and deeper than expected."
The Japanese automaker said it would post an operating loss of 150 billion yen ($1.66 billion) for the fiscal year ending in March. Just last month, Toyota had been forecasting an operating profit of 600 billion yen ($6.65 billion).
Operating profit reflects the financial performance of a company's core business, before taking into account costs such as income taxes and interest payments. Toyota said it hadn't recorded an operating loss since it started officially reporting such results in 1941. Based on internal company calculations, however, the automaker had an operating loss in 1938, the year after it was founded.
In addition to slumping consumer demand, Toyota and fellow Japanese automakers Honda Motor Co. and Nissan Motor Co. have been battered by a soaring yen, which has risen 24% against the dollar this year and is currently trading at 89.98 to the greenback.
That raises the cost of importing vehicles into the United States, although the higher prices aren't necessarily passed on to buyers, further hurting the automakers' profits. It also decreases the value of profits the automakers earn in the U.S. when dollars are converted into yen.
