Toyota expects 80% drop in profits this year

Toyota Motor Corp said Tuesday that it expects a decline of 80% — to its lowest level in nine years as the largest automaker of Japan is struggling with the devastating effects of the pandemic coronavirus, which has fallen off the global demand for the vehicle.

The expected damage of Toyota demonstrates — what price the car manufacturers will fight for a recovery after the virus crisis in the coming months as they gradually restart the plants after limited public transportation allowed workers in many countries to get to work.

The industry expects limited volume of production due to serious violations in the supply chain and measures for social distancing in the factories, along with weak demand in the form of job losses and concerns about the economic downturn that affects consumer spending on large purchases such as cars.

Toyota, one of the most profitable automakers in the world, estimates the loss in the amount of 1.5 trillion yen ($13,95 billion) of the decline in world car sales this year, but still expects to receive an operating profit of 500 billion yen ($4,65 billion) in the new fiscal year.

«Coronavirus has caused us more powerful impact than the global financial crisis of 2008" — said the President of Toyota Akio Toyoda (Akio Toyoda) at the briefing live.

“We expect a significant drop in sales, but despite this, we expect to remain in positive territory. We hope to become the leader of the country's economic recovery”.

Toyota sees drop in its operating profit from 2.44 trillion yen ($22.7 billion) in the just-concluded year, the lowest volume since the 2011/12 financial year.

The automaker predicts the level globalnych sales at 8.9 million vehicles this year, that is at least nine years, against of 10.46 million in the previous financial year. It is expected that sales will recover to the level of 2019 next year.

Competitors, Honda Motor Co Ltd and General Motors, have refrained from publishing forecasts, citing uncertainty about the coronavirus.

On Tuesday, Honda announced its lowest annual profit for the last four years, after car sales in the fourth quarter fell by 28%, and the automaker has lost 5.2 billion yen ($48,36 million), which was the first quarterly loss since March, 2016.

Japanese automakers are preparing for the drop of car sales throughout the year, as economists expect a slow and uneven recovery of the world economy after the end of the pandemic.

As a result, some analysts see the reduction in annual global car sales by about a third compared with a fall of 11% in 2009-2010 after the global financial crisis.

Toyota expects sales to remain weak in the month of December before returning to the levels of 2019 next year.

For the financial year that ended in March, Toyota said it was due to the pandemic coronavirus profit of 160 billion yen ($1.5 billion) due to reduced annual sales by 127 000 vehicles a record high of 10.6 million last year.

Most of all it was reflected in North America, a key market, where sales in March fell by 8%, which led to operating losses.

Despite a sharp decline in profits and a sharp decline in profitability, Toyota has announced that it will spend more than 1 trillion yen (more than $9.3 billion) on capital expenditures and investments in R&D (Research and Development, Scientific research and experimental development), while maintaining expenses at the same level compared to last year.

«We can not stop investing in the future" — told reporters COO Koji Kobayashi (Kobayashi Koji).

Materials on this topic can also be read:
Toyota sees 80% profit drop as virus wipes $14 billion off car sales (Reuters)

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