Leo Lewis in Tokyo and Tom Bawden
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Graphic: British carmakers hit the brakes
A further 800 jobs in Britain’s car industry were put at risk yesterday after Toyota Motor, the greatest example of Japan’s postwar economic miracle, warned that it will go into the red for the first time since 1941.
The possible job losses – 15 per cent of Toyota’s UK workforce – would add to the 40,000 positions expected to be eliminated from the UK car industry’s 200,000 over the next three years, as sharply declining demand for its cars is likely to trigger redundancies across Toyota’s business.
Toyota, which analysts universally believe to be the most innovative and efficient of the leading car companies, makes the Auris, the Avensis and Corolla models at its plant in Burnaston, Derbyshire, and manufactures engines at its Deeside factory in North Wales, which employ 5,250 people.
Toyota, which decided recently to halve the number of shifts on its Auris production line and will close its Burnaston plant for four weeks over the next four months, follows a string of carmakers in announcing moves to cut costs.
Vauxhall’s owners are in talks with trade unions over pay cuts and a four-day week and has offered nine-month sabbaticals to thousands of workers at its Ellesmere Port factory in the North West of England.
Tata Group, owner of Jaguar Land Rover, is negotiating a government bailout worth tens of millions of pounds to enable it to pay suppliers, while Honda’s plant in Swindon will be mothballed for February and March. BMW’s Mini plant in Cowley, Oxford closed ten days ago for an extended break of a month and has shed 300 agency staff, while Ford’s Transit van factory in Southampton has closed for four weeks instead of the usual one.
Analysts in Tokyo predict that the cost savings at Toyota, which recently dethroned General Motors as the world’s largest carmaker, would send a shockwave throughout the extensive “food chain” of industries that keep Toyota’s industrial engines running across the world.
Katsuaki Watanabe, Toyota’s president, described the situation as “an emergency of a sort we’ve never experienced before”, adding that there was no way to see an immediate end to the crisis.
Professor Garel Rhys, of the Cardiff Business School and president of Cardiff University’s Centre for Automotive Research, said: “Every single car market in the world is down, signalling it’s a depression not a recession. This year is terrible, next year will be even worse. The last time the North American, Japanese and European car markets were all in recession at the same time was in 1945, which was hardly a normal year.”
Professor Rhys also predicts that the sale of vehicles in the UK, which stood at 2.4 million units last year, will fall to 2.1 million this year and to 1.6 million in 2009.
Kota Yuzawa, an analyst at Goldman Sachs, is now predicting global auto demand to fall between 15 and 20 per cent over the next few years, with potentially dramatic reviews of production systems by leading manufactuers.
Toyota has not made any of its permanent staff redundant yet but it has cut an unspecified number of temporary workers. The group promised to do all that it could to retain permanent British workers but could not rule out the possibility of redundancies.
A Toyota spokeswoman said: “The times are changing so fast that it’s difficult to predict what will happen even in the next two months.”
Toyota’s bleak admission is a double-punch to markets as they approach the last few trading sessions of the year, and the company’s full-year loss – unprecedented since the company stopped making looms and turned its hand to carmaking – is expected to reverberate throughout Japan.
“We have lived our whole lives knowing only a situation where Toyota makes money,” the senior executive of one Nagoya-based car dashboard maker told The Times. “This changes our whole world.”
Ray Kishor, a former consultant to the car industry and now an analyst, says the lesson from Toyota’s rapidly declining fortunes is that it leaves little hope for the rest of the industry. “Clearly nobody is immune to the collapse in consumer confidence and the weakening economy.”
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Toyota are always helping other car companies out and goverments when are they going to help toyota out. Car manufacturing in the uk is being sucked dry by parasites, bosses who are on to much money and not putting value to car's built. Toyota are keeping workers in work, they will survive
Keith, Cannock, UK
Manufacturers need to go back to making traditional cars that don't cost the earth, similar to the Mini's. There is one company out there that is doing so already, but hasn't got it's cars properly marketed - The Citroen owned Aixam. It's basic, but who cares it's a new car without the debt!
Darren, Warrington, UK
Memories of previous Labour governemt's dalliances with the motor trade: the failed gull-wing De Lorean car and the clunky Triunph Meridian motorcycle coperative come to mind...?
Bob, Bromley, Kent
Toyota will pull through in good health by bringing forward its Hybrid engine into a desperate and hungry for market.
Paul, Chesterfield, U.K.
The real culpret are the Arab Oil producers who sucked trillions out of the West to feed their greed caused this depression
Dr Christian Chan, Singapore, Singapore & Philippines
The auto industry, like the airline industry is restructuring. Toyota will be one of the survivors, but only because they build the best quality vehicles. Toyota will be back to rude good health once GM, Chrysler, Jaguar etc are allowed to collapse. The strong will survive, the weak will perish.
Steve, Hamilton, New Zealand
If Toyota are having problems the likes of Chrysler and GM are dead ducks!
The billions of dollars to save them has been squandered. Come March they'll go down the pan no matter what Gambler Bush pushes their way.
I think Las Vegas gives better odds.
richie Kidd, washington DC, usa
I wouldn't drive a car older than 15 yrs because of safety. Agreed disposable culture is disgraceful, but car safety came a long way in a short time (10-15 yrs ago). I have a 10yr old BM which I am keeping. Love it. And I love its abs and air bags as I do lots of kms. Could not care what looks good.
Jen, Sydney, Australia
Ah, now, let's see, should we bail out Toyota, Nissan and Honda, Mandy? After all, you're doing the same for Jag/LR? This is an idiotic policy in a country that has been sucked dry for years by the highest pretax prices for vehicles. It's payback time - not a penny for these sharks!
Colin, shrewsbury,
Toyota, in my experience, make excellent cars which if you keep properly serviced will last and last (including my 17 year old Supra), which would mean that demand for new cars is very vulnerable.
Arnold Ward, Weybridge, Surrey, UK
Toyota earned the record group profit of more than
200 billion dollar last year, but approx 15 biilion dollar loss is now predicted for this financial year. Disclosing this the president of Toyota Japan immediately decided to resign and a younger successor has been nominated with no excuse.
M. Murakami, Tokyo, Japan
I run a Defender and a Merc 190 diesel of early 90s vintage. Both are pleasing to the eye, fit for purpose and maintainable at a fraction of the cost of other cars. Problem is too much choice, over production of complex cars, solution? Design CHEAP MAINTAINABLE car fit for Africa and for England!
Paul Bailey, Huntingdon, UK
My advice would be to buy a car made during a period of profitability for the manufacturer concerned - Fords between 2003 and 2006 should be OK , VW`s from 1992 to 1998 and so on. But not in years of losses, and not next year.
The age of the trusty banger is back
CAB Sanders, Malton, Yorks
Spot on, Andrew. Fashion-driven consumerism makes life worse not better. Change your computer - we have slowed down the operating system! Change your appliances to use less power - at a massive carbon cost in manufacturing! Change your car - the old one looks naff and costs less to service!
Eric Pritchard, Clevedon, UK
We only change our cars for vanity ,so keep what you now have and be gratefull,no bailout for car manufactures, especially ones owned by international owners!
Robert Hesselden, Newark, UK
A lot of carmakers made a fortune out of us in "Treasure Island" when our prices were sky-high compared with the USA and Europe.
Now they can put their hands in their own pockets to save themselves.
Dave, Slough,
Excellent news, let us keep cars for 10 years, cook real food, repair clothes, and stop this crazy spending. We will not be unhappy.......We have been conned into the cycle of greed by politicians, the media, celebs etc. Time to re adjust, and re evaluate life!
Andrew, canterbury,
I have an excellent Toyota Corona that is now 13 years old, Should I buy a new car? The failure of government suggests I should delay a decision to buy a car for a long time. Toyota is being affected by governments destroying viable markets for cars by insisting on saving the failures.
Brian Lewis, Manila, Philippines
Laissez-faire! A rescue package is OUT OF THE QUESTION & totally diametrical to Labour's policy to tax motorists off the road. Labour's anti-motoring taxes have ruined our economy when USA & Asia petrol is at a 60% discount to our price. Laissez-faire let market forces take their course.
Jon, Preston, England
Shout loud to stop this stupid government wasting all our money on failing auto manufacturers. It would be the ultimate irony to see a government that is socialist and purportedly green, funding the Jaguar. No owners of Jaguar have ever been successful. Do not penalise Toyota workers to save failure
chris clarke, cha, USA
When you have a Government that finds every excuse to tax or fine motorists. Is it any wonder that when it comes to balancing the household budget, buying a new car is not near the top of the list?
With the thought of such delights as average speed cameras, road pricing, I have given up driving.
Harry H, London, UK
Look forward to September 09, when "Car's will be "Affordable without "Credit""!
Paul, Manchester, UK