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Wednesday, March 04, 2009

Toyota Facing First Operational Loss in 59 Years

Japanese carmaker Toyota Motor Corp. is facing a serious problem as it is losing its share in the US car market, the largest car market in the world. The economic recession is getting aggravated day by day and the global auto market is having its impact at this moment. Toyota recorded 40% drop in the US market as the demand fell in the US car market significantly. Toyota is now going to see its first operational loss in 59 years due to economic slowdown world wide. The situation has been intense for the Japanese automaker due to surging Japanese currency against foreign currencies.

Well, other automakers are also facing the same problem as overall car demand fell in the US car market. Japan’s second largest automaker, Honda, has seen 38 percent fall in its US sales. Nissan Motor’s sales drop by 37 percent, while General Motors experienced 53 percent drop in its sales. GM and Chrysle are surviving on government bailout at this moment.

Well, I think, Japanese government should also provide similar help to Toyota because if the company drops its domestic production, many people in Japan will be unemployed and that would be an added pressure for Japanese government. Moreover, Toyota should also focus on low-cost car models which will have huge demand in this time of economic recession. Toyota should also give more importance on the fast-growing markets like India, China and Russia. Toyota has recently announced that it would set up its second manufacturing plant in India, looking to gain more advantage of India’s cheap labor and low production cost. By reducing operational cost, Toyota can offer more competitive price for its products in the US and European markets.

Related article:

Bloomberg

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