Toyota has larger losses than GM

NY Times:

Toyota Motor booked its worst annual net loss ever Friday and warned that it would plunge even deeper into the red this year, a stunning reversal for an automaker whose breakneck expansion and record profits seemed unstoppable just 12 months ago.

The Japanese automaker said it lost ¥765.8 billion, or $7.7 billion, in the first three months of the year — even more than the $5.9 billion lost by its near-bankrupt American rival, General Motors, in the same period.

Toyota blamed its woes on the slump in global demand and a strong yen, which makes exports from Japan more expensive.

The devastating numbers from the fourth fiscal quarter contributed to a worse-than-expected ¥436.9 billion net loss for the year that ended in March.

The automaker warned it would lose ¥550 billion this fiscal year. It cut its annual dividend by nearly 30 percent, its first cut to the dividend in at least 15 years.

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What this shows is that the losses of the automakers has little to do with their product mix and a lot to do with the economies of scale that require certain minimum sales levels to make the companies profitable. It also suggest that the administrations requirements that the companies make more fuel efficient cars will not increase sales.

It could be that Toyota's larger losses were also caused by its sales of Prius models at a loss that is difficult to sustain when its more profitable models are not selling in sufficient quantities to subsidize them.