Toyota's losses could approach those of U.S. car companies
Toyota (TM) may have to pay its workers less than the U.S. car companies do. It may also make better cars. It is now the number one auto company in the world based on unit sales. None of that makes it entirely immune to the economic downturn.
Toyota has grown so big that it has exposure to the flagging car market in every large country in the world. It has not made the huge cuts in employees that the Big Three have, so its cost base has not dropped as sharply as those of the domestic car companies.
The strain on Toyota's big profit machine is showing. According to Reuters, "Toyota Motor Corp.'s operating loss could balloon to over 500 billion yen ($5 billion) in the year to March 2010, as the global economic crisis hits car sales."
The projections may make the Treasury Department reconsider what it will have to invest to keep General Motors (GM) and Chrysler operating. If Toyota can't make money, it is likely that no other big car company in the world can.
Douglas A. McIntyre is an editor at 24/7 Wall St.