Toyota reveals first slide for three years

Tag: Slide Switch

Toyota, the industrial bellwether of the Japanese economy poised to become the world's biggest carmaker, has stunned markets by forecasting its first full-year slump in operating profits in nearly a decade.

In delivering the bad news, Katsuaki Watanabe, the company's president, also hinted that the group's expansion plans would increasingly focus on parts of the world that, unlike Japan and the United States, are “natural-resource-producing nations.

The forecast came as Toyota declared its first slide in quarterly profits for three years. Income between January and March was down 28 per cent to 316 billion yen (£1.5 billion) - considerably less than the market had expected. Investors fear a similar slew of bad news from other Japanese carmakers, whose shares have been severely punished in the Tokyo market's extended rout since January.

The profit warning, although readily explicable by the US downturn and rising input costs, bursts a bubble that has surrounded Toyota since the beginning of this century.

For the past nine years, Toyota's ascendancy has seemed as relentless as the decline of the “big three” American carmakers in Detroit. Its rise has been symbolised by brisk global sales of its fuel-efficient hybrid models - vehicles pitched as the very antithesis of the gas-guzzling behemoths produced by Toyota's US rivals.

However, although Mr Watanabe was quick to assure investors that he had not “thrown in the towel” on the group's aggressive 10 per cent margin targets, the market has clearly deteriorated further than many expected.