Toyota forecasts $4.95 billion loss

Toyota has forecast its first operating loss in 71 years, citing falling demand and an appreciating yen as the key factors leading to its poor performance. Despite predicting late last year that its loss would only amount to ¥150 billion ($1.7 billion) in the year through March, the carmaker has now forecast an annual loss three times greater than this.

The world's largest carmaker now says its first annual operating loss in seven decades will be ¥450 billion ($4.95 billion) for the fiscal year ending March 31. It also expects is sales to drop 17.87% for the year, down to 7.32 million units. Last year Toyota posted an $18.9 billion net profit, reports Automotive News.

“The environment we’re in is extremely tough,” President Katsuaki Watanabe told reporters today in Nagoya recently. “We’re facing an unprecedented emergency situation. Unfortunately, we can’t see the bottom.”

Adding to the falling sales is the yen's rapid surge against a weakening dollar, which is also having devastating effects on Toyota’s profit.

In order to cut costs as much as possible, the carmaker may have to delay launching new models, lashing research and development costs and extricating itself from non-essential activities, such as motorsports.

The last time Toyota posted an operating loss was in the year ended March 1938.