TOKYO — Toyota Motor, the Japanese auto giant, announced Monday that it expected the first loss in 70 years in its core vehicle-making business, underscoring how the economic crisis is spreading across the global auto industry.
Toyota’s president, Katsuaki Watanabe, at a news conference in Nagoya, Japan, on Monday. “We are facing an unprecedented emergency,” he said.
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Analysts said Toyota’s downward revision, its second in two months, showed that the worst financial crisis since the Depression is threatening not just the Big Three but even relatively healthy automakers in Japan, South Korea and Europe. Many other companies will also soon be reporting losses.
Worse, analysts said that they expect next year to be even more painful, amid forecasts that the global economy will continue to slide until at least the summer. This could cause a significant shakeout, driving cash-strapped smaller and weaker companies into the arms of a smaller number of bigger, richer players.
“It is just a matter of time before all major automakers are losing money,” an auto analyst in Tokyo for Credit Suisse Securities, Koji Endo, said. “And things will just get worse next year, when companies start losing money for the second consecutive year.”
On Monday, Toyota said it expected a loss during the fiscal year of 150 billion yen, or $1.7 billion, in its group operating revenue, the amount it earns from its auto operations. Toyota said that would be its first operating loss since 1938, a year after the company was founded.
The loss would also be a huge reversal from the 2.3 trillion yen, or $28 billion, in operating profit Toyota earned last fiscal year. The company, which has been neck and neck with General Motors to be the world’s largest vehicle-maker, said it still expected to eke out a narrow net profit in the current fiscal year, which ends March 31.
The company, which just a few months ago seemed unstoppable after eight consecutive years of record profits, said it suffered from plunging vehicle sales not only in North America but even in once-promising markets like India and China, which many had hoped would prove immune to the United States malaise.
“The change in the world economy is of a magnitude that comes once every hundred years,” Toyota’s president, Katsuaki Watanabe, told a news conference in Nagoya, Japan, near the company’s Toyota City headquarters. “We are facing an unprecedented emergency.”
Mr. Watanabe said the company would respond by suspending investment in new plants, including the delay in starting a factory in Mississippi announced last week, and moving some production lines to single shifts. The company has even unplugged electric hand dryers at some offices in an effort to cut costs.
With some $18.5 billion in cash, and relatively little debt, Toyota is still in far better shape to weather the downturn than G.M. and Chrysler, which on Friday received $17.4 billion in emergency loans from Washington.
In Japan, the economic slowdown could force a realignment of the country’s eight automakers, which are globally competitive but have begun feeling increasing pain from the global downturn.
The biggest drops have come in the United States, traditionally the Japanese companies’ most profitable market. After years of increasing market share at Detroit’s expense, Japanese companies are seeing sharply lower sales. In November, Toyota saw its sales drop 33.9 percent and Honda Motor 31.6 percent, faring slightly better than G.M.’s 41 percent decline.
Sales are also down in their home market of Japan, both because of the crisis and longer-term demographics in this rapidly aging society. Last week, an industry group announced that new car sales in Japan would drop next year below five million vehicles for the first time in 31 years.
Japan’s automakers have responded by slashing global production by 2.2 million vehicles in the current fiscal year. They have also cut profit forecasts, laid off non-staff workers and delayed investment in new factories. Last week, Honda Motor, the nation’s second-largest carmaker, reduced its profit forecast by two-thirds for the current fiscal year.
The auto slowdown has helped worsen an increasingly nasty recession in Japan’s export-dependent economy, the world’s largest after the United States. On Monday, Japan finance ministry said exports dropped 26.7 percent in November, the largest drop since statistics started being kept in 1980, to push the nation into a rare trade deficit for the month.
The financial turmoil has also hurt carmakers by driving up the value of the Japanese yen, which has risen some 25 percent since summer. A higher yen makes Japanese autos and other products more expensive overseas.
On Monday, Toyota cited the currency as one reason for revising its forecast. Analysts say Toyota has been seen as the most vulnerable of Japan’s big automakers because it had been investing heavily in new products, including a full-sized pickup truck for the United States market, just when auto sales started to fall.
“They’ve caught the same cold that Detroit has caught,” said Christopher J. Richter, senior analyst in Tokyo at Calyon Capital Markets Asia. “Everything is going wrong for Toyota this year.”
On Monday, Toyota also lowered its worldwide vehicle sales forecast for the current fiscal year to 7.54 million vehicles, far below the 8.9 million vehicles it sold last year. It said the decline would be particularly large in North America, where it forecast it would sell 2.17 million vehicles this fiscal year, down from 2.96 million last year.
Despite the loss in its car business, the company said it still expected to post a group net profit in same period of 50 billion yen, or $560 million. Toyota’s group includes automaker Daihatsu and truck builder Hino.
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