More red ink for Toyota, GM
Toyota has made the worst annual loss in its history as sales tumble due to the global economic crisis.
In the year to 31 March, the world’s biggest car maker made a net loss of 436.94 billion yen ($4.4 billion), a stark contrast to a record profit the year before. Toyota said the disappointing results were down to poor sales in the U.S. and Europe, soaring costs of raw materials, and a strong yen.
“Both revenues and profits declined severely during this period,”
Toyota president Katsuaki Watanabe said.
In the year ending March 2009, Toyota shifted 7.57m units, a decrease of 1.34m units over the year before. The company estimates that sales will get even worse this year, with a drop of 1.06m units to 6.5m between now and March 2010.
Toyota says that it expects to make a net loss of 550 billion yen ($5.6b) in the financial year ending in March 2010.
“It appears it will take some more time before the financial markets in the US and Europe normalise and the global economy recovers,” Mr Watanabe added.
Meanwhile, General Motors has reported a $6 billion loss for the first quarter of 2009 as its revenues collapsed and cash drained at increasing speed from company coffers. Between January and March, GM built 1.33m cars globally, some 900,000 fewer than in the same period in 2008.
GM has until 1 June to reduce its debts with outside investors, as well as renegotiating labor costs with the United Auto Workers union. If GM fails to rebalance its perilous financial position, it is likely to end up in bankruptcy.
According to financial reports, GM has lost some $88b since 2004 and the value of its shares have crashed by 90 percent. GM bosses say that they are prepared to go through bankruptcy, but recognize that they have to move through the process very quickly.
GM fears “a vicious circle” in which car buyers stay away from a company that’s in Chapter 11 bankruptcy protection, causing revenue to collapse further and putting the firm in extra peril.