Weak U.S. economy damages Toyota

You know the economy is experiencing hard times when even industry leader Toyota announces a major profit warning. Toyota is expected to suffer its first drop in operating profit in more than nine years, due mostly to falling U.S. sales and a stronger yen, and most analysts are predicting profits will fall by 20% on last year’s levels to about ¥1.8 trillion ($18 billion).

Toyota’s revenues for the past financial year were expected to top ¥26 trillion but the actual number could be lower because of the U.S. credit crisis slowing demand, the Nikkei reports. This is a 10% increase on last year’s result but even extra sales coming from new markets such as China, India and Russia won't be enough to increase porfits.

According to the Japanese reports, Toyota will limit its spending on research and development as well as capital investment to minimize the drop in profits as much as possible. It also plans to aggressively expand its presence in the aforementioned new markets, where its reputation for building reliable and fuel-efficient vehicles is helping it gain market dominance.

One of its major projects for the coming year is the successful launch of its iQ minicar as well as starting production of a new range of low cost cars at a newly built Indian plant.