TOKYO -- A torrent of red ink in North America and Europe has forced the once-mighty Toyota profit machine to triple its loss forecast for the current fiscal year and seek sweeping cost cuts of $5.5 billion.
Executive Vice President Mitsuo Kinoshita said last week that Toyota will try to bring down fixed costs by 10 percent.
Key to this will be freezing plans to build plants and expand production capacity globally, including China, India and Brazil.
The company already has said that a plan to start production in late 2010 at a Prius factory in Mississippi is on hold. Toyota also will cut spending on marketing and r&d. The goal is to chop $5.49 billion (¥500 billion) in costs, Kinoshita said.
Toyota also may cut jobs, but Kinoshita said no involuntary layoffs will be made.
Last month, Japans Nikkei newspaper reported that Toyota was considering the elimination of 1,000 jobs in North America and Britain. Said Kinoshita: Outside of Japan, we intend to make every possible effort to protect the jobs of our employees.
The worlds biggest automaker now is bracing for an operating loss of ¥450 billion ($4.95 billion) in the fiscal year ending March 31, the company warned on Friday, Feb. 6, while announcing third-quarter numbers.
The result will be Toyota Motor Corp.s first operating loss in seven decades.
Global sales for the fiscal year now are seen tumbling 17.9 percent to 7.32 million units. Thats down from Decembers forecast of 7.54 million vehicles and last fiscal years total of 8.9 million.
Toyota also will book its first annual net loss since 1950 -- $3.85 billion. That contrasts with last years $18.90 billion net profit.
Toyotas results are getting hammered by plunging business in the United States, where industry sales rates reached quarter-century lows at the end of 2008.
Meanwhile, the yens rapid surge against a weakening dollar lopped billions more off the companys profits.
Toyotas rush to expand North American output, by opening new plants such as its Tundra pickup factory in San Antonio, only added to its crisis of overcapacity.
As the business expanded, there may be certain issues we didnt pay enough attention to, Kinoshita said.
In the October-December fiscal third quarter, operating losses in North America swelled to $1.40 billion. Just a year earlier, the region reported an operating profit of $984.6 million.