Toyota on Tuesday forecast a sharp drop in sales and operating profit over the coming year as the Japanese giant suffers from the “wide-ranging, significant and serious” fall-out from the coronavirus pandemic that has shredded the global auto market.
The manufacturer said its operating profit for the fiscal year ending in March 2021 was expected to dive 79.5 percent and declined to even give a forecast for net profit.
The firm said it assumed the global automobile market would “bottom out” around the middle of the year and then recover but warned that the impact of the pandemic would be felt for some time.
“The impact of COVID-19 is wide-ranging, significant and serious, and it is expected that weakness will continue for the time being,” Toyota said in its statement.
The car giant said the spread of the disease had affected it in a number of ways: it has had to mothball several plants around the world, parts supply chains are crippled and dealerships are either closed or facing sales slumps.
With different countries tackling different stages of the virus, it is “extremely difficult to foresee the outlook” for Toyota’s business, admitted Chief Financial Officer Kenta Kon in a briefing to reporters.
Carmakers around the world have suffered as the pandemic slams the global economy into reverse.
Auto production in Brazil, for example, fell a catastrophic 99 percent in April, according to the carmakers’ association.Dealerships have also been slammed by the pandemic
Profits at Toyota’s global competitors have seen similar falls, with General Motors reporting an 86-percent slump in first-quarter earnings last week.
Satoru Takada, auto analyst at TIW, a Tokyo-based research and consulting firm, told us that Toyota had been putting in a “steady” performance but was powerless in the face of the pandemic.
“The auto industry’s business environment has totally changed,” he said, with the virus slamming both supply and demand.
“No one can predict when the impact will ease and what the business environment is going to be like after the storm of the outbreak,” the analyst told us.
“The end of the tunnel has yet to be in sight.”
As a sign the firm was performing well before the crisis took hold, Toyota said its net profits for the last fiscal year ending in March rose more than 10 percent.