NAGOYA, Japan - Toyota Motor Corp. said Monday it will report its first operating loss in 70 years, acknowledging that after a decade of rapid growth it can no longer escape the slowdown plaguing the global auto industry.
The Japanese auto giant also lowered its global vehicle-sales forecast for the second time this year and said it was putting ambitious expansion plans on hold, in large part because of a precipitous drop in demand in the key U.S. market.
"The tough times are hitting us far faster, wider and deeper than expected," Toyota President Katsuaki Watanabe told a gloomy news conference at the company's Nagoya headquarters. "This is an unprecedented crisis requiring urgent action."
Toyota had reported strong growth in recent years, boosted by heavy demand for its fuel-efficient models like the Camry sedan and Prius gas-electric hybrid.
But Watanabe said a severe drop in demand, especially in the U.S., which accounts for one-third of vehicle sales, and profit erosion from a surging yen were too much for Japan's No. 1 automaker. Overall U.S. auto sales fell to their lowest level in 26 years last month.
Toyota dealers in the East Valley are estimating that their sales have dropped about 30 percent. Tom Foushee, general sales manager of Earnhardt Toyota Scion in Mesa, said sales have been off almost the entire year.
"We've had to make personnel adjustments to maintain profitability," he said, indicating that 25 to 30 percent of the dealership's work force has been cut.
Toyota said it expects an operating loss of 150 billion yen ($1.66 billion) for the fiscal year ending in March, compared with an operating profit of 2.27 trillion yen ($25.2 billion) a year earlier.
Toyota said it would still post a small net profit of $555 million thanks to outside dividend income, down from year-earlier earnings of $18.89 billion. But operating income is seen as the best reflection of core business.
The announcement won't hurt Toyota's image too badly, said Bob Staup, general manager of Riverview Toyota in Mesa.
"We feel that the name brand has not been devalued at all," he said. "Toyota is a cash-rich corporation that's invested a lot in the United States. Things will turn around."
Toyota, which started in business as a loom maker, began making trucks and passenger cars in 1937. Its first and only operating loss came the following year, before it started reporting formal results in 1941.
In its forecast, Toyota lowered the number of vehicles it expects to sell globally this calendar year to 8.96 million, down 4 percent from last year.
Earlier this year, Toyota had projected worldwide sales of 9.5 million vehicles.