Toyota Posts First Loss In 59 Years
Here's a story that we missed late last week, probably because we were busy having nightmares about snake heads. Toyota lost $7.74 billion this past quarter. That's more than GM (though less than GM pre-bailout), and much more than predicted. It's the company's first annual loss since Elvis was in the Army.
The reasons for this are pretty obvious. Toyota's troubles are caused by a bad economy, the North American credit crunch, and a strong yen. Falling gas prices also make the Prius seem way less cool.
Toyota Posts Big Loss, Signals More to Come [Wall Street Journal] (Thanks to everyone who sent this in!)
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"That's than GM, and much more than predicted."
Really now? Intriguing.
Somewhere on the Isle of Man, Jeremy Clarkson is doing a happy dance because the Prius is no longer a hip cool thing.
@Laura Northrup: We figured you were trying to save a bit of money... 5 bytes less to each reader? That's a few KB per day, right? ;)
Don't forget they made the huge mistake of keeping all the employees on the payroll. The question is how long are they willing to take losses before they fire employees and close plants?
Also, a lot of the loss was non-cash adjustments related to the strong Yen - actual cash loss was about $1.5BN.
Honda's answer to the Prius, the Insight, is only $19,250.
@Shadowfire: That's pixels that weren't wasted to be downloaded, rendered on my screen, and viewed, thus saving the environment!
The sound you hear is Toyota's lunch being hungrily devoured by Honda.
I was considering a Prius - until I saw a base model sticker price of 25,000 USD. Even with $4/gallon gas prices, it'd take ~20 years to make up price difference between that and my Scion xD. (Versus 10 years for the base model Insight.)
@Ben Popken: yeah, but Ben, the new generation Prius (which a lot of people are waiting for gets almost 10 mpg more than the Honda Insight and starts at $22,000.00 ([www.toyota.com])
When the new Prius starts hitting lots, I would be surprised if it doesn't outsell the Insight. And I'm saying this as someone who owns a Honda Motorcycle and a Honda Civic Hybrid.
The new solar option on the Prius is so cool, that I am tempted to get one in between now and the time my Fisker Karma plug-in hybrid arrives.
@stevejust: Have you heard the stories about people actually trying to buy a Prius? I've heard horror stories about dealerships demanding $1000-$2000 over sticker price and walking away if you don't agree to it.
I like the Prius too (drove a rental recently) and I was thinking about replacing my train car with one when it dies. But if the dealers are too snooty, I'll just take my business to Honda.
Hmm wonder if I can calculate how long it would take to earn back $2,200 when your car gets 10 more mpg at current gas prices. Lets say you drive 10,000 miles per year. So a car at 60 mpg would cost about $417 for gas for a year at $2.50 (10,000/60)x2.5. A car that gets 50 mpg would cost $500. So it would take 25+ years to earn back the difference? Now if gas was $5.00 a gallon again, I guess it would be more like 12.
Ring me again when Tata Motors posted a loss.
@humphrmi: I tried to get a Prius in 2004 and couldn't because they weren't available and they closed the waitlist, so I wound up with my Honda Civic Hybrid. So I haven't only heard stories about it, I lived it.
Don't get me wrong, I like my car. And I like Hondas generally (have the honda motorcycle.)
But living in LA, there is NO QUESTION Hybrid Synergy Drive is better than Honda's Integrated Motor Assist. NO QUESTION in stop and go traffice that it's better. Honda's IMA is well suited to suburban driving, or highway driving. But not so much city driving.
As for dealers, there are crappy Honda dealers out there too. And yes, you will likely pay sticker for a 2010 Prius for the next few months after they hit dealer lots. But I can tell you as someone who's driven virtually every hybrid except the Lexus LS600h, the new Prius will rock the doors off the Insight, for only $3000 more.
@yagisencho: The base model Prius hasn't been $25k in years. The new 2010 base model price is $22k, for example. And after Saturn tired to call the Saturn Aura hybrid the lowest priced hybrid in America, Toyota lowered the current-style Prius to $21k.
And I'm not sure about the comparison of the xD to the Prius. They're just not comprable in terms of size, etc.,. But the 2008 Prius gets 46 mpg combined according to fueleconomy.gov and the 2008 xD gets 36 combined highway/city, so you'd be doing 10 miles better every gallon. Maybe you don't drive enough to make up the price difference.
I was reading that a major factor was that their factories were idle and they couldn't convert their factories to produce the vehicles in demand. So all the, I dunno, Landrover factories, if they could make, corrollas or what not, they loss wouldn't have been as bad.
Falling gas prices? Is it just San Antonio, that the gas prices everywhere jumped up 10 cents this weekend, followed by a couple more cents on Monday? And I imagine it isnt going to go back down anytime soon!
@Saboth: When you get a car with a better stereo, do you calculate how long the optional engine with the extra horse power will take to pay for itself? Like, would you do that calculation when trying to decided between a BMW 3 series and a BMW M3?
What about how long it will take for the 9-speaker Harmon Kardon soundsystem to pay for itself?
What about the moon roof? What about the optional slaughtered cow interior?
Why is that all of a sudden when you're talking about a hybird engine, the question becomes one of economy?
I bought by hybrid because I want to use as little gas as possible. That's why I ride my bicycle to work. I don't sit here and say, oh, what a waste of money my hybrid was because I ride a bicycle to work. No. The anaylsis is flawed.
If people can spend extra money on faster less efficient engines without a question of "paying for itself", why should my choice to spend extra on a more efficient engine be a question of "paying for itself"?
@humphrmi: "Have you heard the stories about people actually trying to buy a Prius? "
My dad bought a Prius the first or second model year, when there were still 6-month waiting lists. They weren't charging him over sticker ... you just had to get on the waiting list. He actually got his four months early because someone decided not to buy and declined delivery, so they started calling down the list and my dad was the first person on the list willing to buy the color "whatever." (It was red.) Everyone else wanted the color and specific options they'd ordered. He didn't really care. If they're being butts, you need to find a different dealer. (Also, now that there's an actual secondary market and there aren't the dire waiting lists, dealers can't really pull that crap anymore. And dealers often didn't -- used Priuses went for more than new for a while, because people WOULD pay the premium, but most dealers weren't allowed to charge it by contract.)
My experience is that the Prius IS a nicer car than the Civic Hybrid ... it's also a roomier car. Personally, tho, as long as the car seat fit in the back of the Civic, I'd probably buy a Civic, because I don't like the windscreen arrangement on the Prius and I'm not interested in "nice" and all I need for "roomy" is the ability to fit the carseat. My dad, however, drives other executives around in his car for business and while the Prius is a bit of a knee-knocker in the back seat for adults, the Civic is even tighter. Plus he can afford to buy "nice." Me, not so much. I can afford to buy "safe and works." :)
and in 59 years of profit they didn't save one cent of it for rainy days and now need bailout money/yens? Let them rot...
@gStein: @Ben Popken: And if there is no credit, and everybody is scrapping to make their mortgage, utility, and food nut, the Insight will be irrelavant. This place was so much better when Consumerist was not suckling at the teat of CR.
Ben, Ya think Japan won't bailout Toyopet?
@MissPiss:
Oil broke through $60 a barrel today (a psychological number) and its the highest price in about the past six months.
Yeah, even the famed Toyota Production System is susceptible to global economic forces, and when you still have the dealership --> customer concept, you're still not going to have an entirely lean system.
I bet if Toyota had the option in the US to sell cars directly to consumers instead of having to produce so many cars and push them into dealership lots, they wouldn't be in as much trouble.
But, their supply chain concepts have enabled them to become the biggest auto manufacturer, so I think they'll weather the storm.
@Corporate_guy: The problem for companies like Toyota is that there is an informal social contract with employees in Japan. They still practice lifetime employment. That means they hire people before they complete their last year of college, work them like dogs for the first 10 years and pay them absolute crap wages, then gradually start easing them on to easy street both salary and responsibility-wise. They can't let go of the people they wrung the life out of and are now in their 40's and 50's because they'll never get another job, and when they hired them, there was an unspoken understanding about keeping them on until retirement. Japanese corporations groom employees in their particular company's ways from the start. They are not part of a mobile and flexible workforce.
They can't let go of the young people who are cheaper and working like wage slaves because they're doing most of the work while the managers sit on top. It's a cycle which is nearly impossible to break without undermining their reputation as an employer and damaging their credibility as a company. Very slowly, they can pare down the useless people at the top through attrition, but just letting them go would be very difficult.
Ultimately, the Japanese government rewards companies for keeping this social contract in place. If they abandon it, policies might start changing and they will be criticized roundly for undermining social stability. It's just not that simple for Japanese companies to fire people.
Yep, I don't log enough miles to make up the difference. Mind you, I DID consider the Prius, but all the local dealerships wanted 25k for their base model. I understand that's not the dealer invoice or manufacturer's recommended retail price. It's just what all the local dealers were asking for one. 27-29k if you wanted some of the more exciting packages.
Falling gas prices??
Prices went up around here by 30 cents in the last week. What falling gas prices. These are rising gas prices.
@The_Legend: I don't think they need a bailout yet. Companies posted big losses in the past and were still ok. Sure, if things get worse for Toyota, they might be in trouble, but posting a loss in now way means a ship is sinking.
@MissPiss: The lower gas prices the article is referring to is the price drop from last summer, when gas was over $4. Plus this is a 1st quarter report, so the recent price jump doesn't factor in. This price increase was expected, as it happens every year in the period leading up to Memorial Day. It will likely jump anywhere from another $.50-$1.30 this summer, particularly if oil prices increase.
@MissPiss: It's the switchover to the summer fuel mix in most of the US - it's more expensive to refine that. Plus, oil has risen close to $10 per barrel recently... though I am not sure why.
"Falling gas prices also make the Prius seem way less cool."
If human culture can't get over this hump, our species is doomed. The "hump" is letting the marketplace make out important social decisions for us. As a consequence, we are simply incapable of making rational decisions. Totally and completely incapable. We might as well be consulting a magic 8 ball!!
Joe Schmoe's decisions will mimic the fluctuations of the price of gas NO MATTER WHAT THE MARKET DECIDES. Is this a rational system? Is it, free marketeers? Please explain yourself if you think the answer is "yes."
@ShariC: They could let go of some of the Americans they employ and close some US assembly plants. It should actually be quite easy, thanks to 100% non-union employees.
@humphrmi: We're test driving at the moment. Love the 2009 Prius, the first generation ones drive like a tank to me, but these drive really nice...but we may end up with a 2010 because we're in CA and in CA there are ~no 09's left. Silly tree hugging Californians buying all the cars i want.
Drove the Civic too, because that was my dream car forever, and it was the clunkiest thing ever. It was so disappointing. I wanted to cry.
No quotes yet on the 2010s, but will get some today (LA area people were at a training yesterday to get info on them). quotes on the 2009's were well below sticker.
@humphrmi: That only works as long as there's demand. If the Insight is indeed more desirable than the Prius, it will be the car with markups and the Prius will sell at MSRP or even below.
Also, I know it's tempting to compare the Prius and Insight since they're basically the only two bottom up hybrids on the market (everything else is an adaptation of a non-hybrid car) - it's kind of like comparing a Civic and an Accord. The new Prius is a mid-size, the Insight is a compact. Even with the larger size, the Prius gets better fuel economy, and from the reviews I've read, is actually a lot more dynamic to drive (kind of a surprise, Honda is usually hands-down the better car to drive). If I was in the market for one of these, I would definitely be more inclined to buy the Prius - but I'm not, since my utilitarian car / DD has to make economic sense (bought a used Saturn LW200 - 34 mpg highway and cost 6k, it'll take a long time for that extra 15mpg to justify the additional ~19k in cost), and my fun cars have to be fun.
@xrmb: Um, Toyota has billions in cash reserves. They can go quite a while without earning money before they get into GM's position (of course, the same was true for GM ~3 years ago).
@The_Legend: I agree with the CR comment. This blog has been slipping for a while though... my guess is budget issues.
Falling gas prices? Maybe if people would stop paying attention to Ms. Prejean, they'd notice that gas has gone up 30¢/gal in the last 3 days.
@acarr260: The reason oil has risen is because traders are seeing an improvement in the US economy and they think oil can be a good investment. I really wish there was a way to not have oil as an investment, since that is what caused the huge gas prices last year.
The Prius was cool?