Toyota’s first losses in 71 years

Japanese automaker Toyota Motor Corp has seen a loss in 2008, ending a 71-year long streak of operating profits. The last time Toyota posted an operating loss was in the year ended March 1938.

To make matters worse, the world’s second-largest automaker has been handed a downgrade of its top-rated credit by Moody’s Investors Service. Toyota is set to register a 150 billion yen ($1.7 billion) loss in the year through March 2008. Moody’s is reviewing the carmaker’s “Aaa” rating on $19 billion of debt.

The company, which had earlier forecast a 600-billion yen profit, was pushed into troubled times and saw its numbers plummet to deeper levels. Toyota had to even go ahead and cut contract jobs, initiate cost-cutting measures and also shelve salary hike plans. However, the car maker is finding it too difficult to match cost cuts with plummeting profits. All capacity expansion projects have been postponed, said a report.

Meanwhile, reports from the US, the car maker’s most profitable market, said that sales have dipped 34 per cent in November 2008. European sales dropped 34 percent in November.

Toyota, which set on stream its seventh North American assembly line in December, is now mulling over measures to cut production at its US and Canada factories.

Toyota is not the only automotive giant that sees sales drops. Honda Motor is reported to have reduced its earnings forecast this month after the yen’s 25 percent gain against the dollar in 2008. Another major, Suzuki Motor Corp is set cut domestic output by an additional 30,000 units to 1.16 million vehicles.