Toyota Motor Corp said on Tuesday it expects profit to drop by 80% to its lowest in nine years, as Japan’s biggest automaker grapples with the impact of the novel coronavirus which has sapped global demand for vehicles.
The expected damage to Toyota’s bottom line highlights how carmakers will struggle to recover from the virus in the coming months as they gradually restart factories after curbs on public movement prevented workers in many countries from commuting.
The industry expects limited output due to fractured supply chains and social distancing measures at plants, along with weak demand as job losses and concern about an economic downturn weigh on consumer spending on major purchases like cars.
Toyota, one of the world’s most profitable automakers, expects to take a whopping 1.5 trillion yen ($13.95 billion) hit from a fall in global vehicle sales this year due largely to the virus, yet it still expects to eke out an operating profit of 500 billion yen in the year to March.
“The coronavirus has dealt us a bigger shock than the 2008 global financial crisis,” Toyota President Akio Toyoda said at a live-streamed media briefing.
“We anticipate a big drop in sales volumes, but despite that, we are expecting to remain in the black. We hope to become a leader in the country’s economic recovery.”
Toyota sees its operating profit in free fall from 2.44 trillion yen in the year just ended, to its weakest profit since the 2011/12 financial year.
The automaker forecast global sales of 8.9 million vehicles – a nine-year low – versus 10.46 million in the year just ended. It expects sales to recover to 2019 levels next year.