Toyota's Loss Shows All Auto Makers Paying Price


Most of you are waking up this morning, hearing that Toyota has just forecast it's first annual loss in decades, and may be saying, "Wow, even Toyota is hurting." This news shouldn't come as a surprise. It was predicted by many analysts last week and the warning signs from Toyota have been showing for some time.

There will be some supporters of the Big 3 who will say, "See! Even Toyota is struggling." That's true, but this is not about Toyota vs. GM. This is about the world economy hitting the brakes.

Last week in Dearborn, Michigan Ford CEO Alan Mulally told me how business is slowing down around the world. Even those red hot markets we have seen in the recent years have been hit by the credit crisis and weakened consumer demand.

The point is that all automakers are paying the price for building too many plants around the world. To say there is over-capacity would be an understatement. No wonder Toyota has put its brand new, almost done Tupelo, Mississippi plant on hold. Toyota doesn't need to build more vehicles in the U.S.

    • Toyota Warns on Profit again, Cuts Investment

In many ways, this global auto slide is more troubling than if it was just the Big 3 hurting. With autos around the world struggling, it makes Ford selling Volvo, GM selling Saab, and Cerberus selling Chrysler incredibly tough. Who wants to pony up a few billion in this global economy?

Make no mistake, this will take a long time to thaw out. As Toyota is showing us today, even the best run companies are struggling.

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