Executives at Toyota Motors, the Japanese automaker, announced today that the company would post its first loss in 70 years, proving that the American auto giants and the overall American economy are wrapped in a global crisis.
Toyota is expected to have lost $1.7 billion in its group operating revenue, or the money it brings in from auto operations. The company has not posted a loss since one year after opening, in 1938.
“The change in the world economy is of a magnitude that comes once every hundred years,” Toyota’s president, Katsuaki Watanabe, told a news conference in Nagoya, Japan, near the company’s Toyota City headquarters. “We are facing an unprecedented emergency.”
In contrast, last year Toyota posted an operating profit of $28 billion. Indeed, the company is now coming down from eight years of record profits. Sinking profits in North America and similar trends in India and China have combined to cause the current losses. Many analysts though that Toyota’s strength in the emerging Indian and Chinese markets might allow it to thrive despite the American economy’s health, but that hope has dimmed.
The worst financial crisis since the Great Depression has hit the Japanese car company hard, and is threatening many other companies in Japan, South Korea and Europe, many of which are expected to announce losses in the coming days and weeks as well.
Adding to the industry’s gloom, analysts expect the hard times to continue well into 2009. Companies unable to weather the economy for that long may end up being acquired by larger companies.
With 11 months of sales figures in the books for 2008, hybrid cars sales may be leveling off. Despite the major increase in gas prices during the summer and fall of 2008, only 268,042 hybrids have been sold through November, compared to the 324,318 sold in all of 2007, according to the Electric Drive Transportation Association. Toyota has only sold 151,025 Priuses this year (the most popular hybrid) compared to 181,221 from all of last year.
Though many expected the sales of hybrids to increase this year with the rising cost of gas, the poor economy is likely to blame for the dip in sales. With auto companies stuggling across the board with sales, and with the high sticker price of hybrids, people may be staying away. The lack of available credit likely contributes to the lower sales as well.
Despite the economy’s effects on hybrid sales figures, there are some great economic incentives to own own (other than the impressive fuel efficiency).
Federal and state governments and corporations have several incentives in place to encourage the purchase of fuel efficient vehicles like the Prius. The federal government offers a tax credit to buyers up to a certain number of cars sold by the manufacturer. This credit can range from $787 to $3150. Many state governments offer tax incentives as well, including Colorado, Connecticut and Illinois. Many states allow hybrid cars to drive in the HOV carpool lanes and some cities (e.g. Los Angeles and San Jose, CA) have exempted hybrid cars from paying for street parking. New York state offers several discounts to hybrid cars on various tolls in the state.
Several companies have also offered incentives to people purchasing a Prius. Google, Hyperion Solutions, and Clif Bar & Co. offer employees $5000 credits toward the purchase of a hybrid car, including the Prius. Other companies with incentives include Bank of America, Timberland, Patagonia, DLA Piper law firm, non-profit American Jewish Committe, Topics Entertainment and Excel Contract Logistics, among others.