GS69

Weak US Economy Damages Toyota
You know the economy is experiencing hard times when even industry leader Toyota announces a major profit warning. Toyota is expected to suffer its first drop in operating profit in more than nine years, due mostly to falling U.S. sales and a stronger yen, and most analysts are predicting profits will fall by 20% on last year’s levels to about ¥1.8 trillion ($18 billion).

Toyota’s revenues for the past financial year were expected to top ¥26 trillion but the actual number could be lower because of the U.S. credit crisis slowing demand, the Nikkei reports. This is a 10% increase on last year’s result but even extra sales coming from new markets such as China, India and Russia won’t be enough to increase porfits.

According to the Japanese reports, Toyota will limit its spending on research and development as well as capital investment to minimize the drop in profits as much as possible. It also plans to aggressively expand its presence in the aforementioned new markets, where its reputation for building reliable and fuel-efficient vehicles is helping it gain market dominance.

One of its major projects for the coming year is the successful launch of its iQ minicar (pictured) as well as starting production of a new range of low cost cars at a newly built Indian plant.

kit cat

iTrader: (6)

a leading manufacturer cutting cost on R&D.....reminds me when Mercedes abandoned the "Cost no Object" theme in the early 90s. I hope their quality/reliability doesn't slip further.

FrayKay

What is an iQ minicar?



Well... Its cute.

PhilipMSPT

iTrader: (5)

This is the worst case scenario for me.

I would rather let Toyota keep costs up, than to further lower quality.

There is a reason why Toyota sells: it's because of efficient quality cars. If Toyota turns into a cost-cutting machine like what most American car companies have done (cutting efficiency and quality), I see many people buying Korean, Chinese, or Indian cars in the future...

-J-P-L-

Doesn't Toyota have many, many billions of dollars in the bank to fall back on during slow periods like this. They shouldn't need to make that many cutbacks and risk losing ground in the industry.



BTW, I really like the new iQ, but it screams SCION! I'm suprised their putting it under Toyota especially with the Yaris Liftback filling that very small car niche -- although the iQ is even smaller.

LexFather

Well we also have to understand Toyota is VERY VERY VERY fearful of the faltering of American car companies and the faltering of our economy as they do make a huge profit from America.

I say let them run Washington! lol

bitkahuna

iTrader: (20)

Cutting back on R&D is exactly the wrong thing to do.

MPLexus301

iTrader: (3)

Let's not forget that this is "according to reports" and is far from confirmed. Especially when just months ago Toyota announced that it was assigning more engineers to R&D teams and lengthening product development cycles to ENSURE quality.

Sheesh, you guys read one sentence and you're ruined