Imagine picking up a particularly old, particularly arid chamois cleaning rag which has only ever been used to brush dust off the windscreen of a showroom model Lexus. Now imagine squeezing it for any available moisture.

This, according current popular wisdom, is how easy it is to wring new cost savings out of Toyota.

Monday’s admission by the mighty Nagoya automaker that it was heading into a full-year loss was, by many measures, the worst profits warning that Japan has ever been forced to sit and listen to.

It was bad for reasons Japanese can readily see and understand, and bad for reasons they never thought they would have to.

These numbers erased any doubt that the entire world is now in trouble. They ask alarming questions about the immediate and medium-term future of auto markets.

They place a huge question-mark above Japan’s self belief as a nation of “monozukuri” craftsmen. In its crudest terms, today’s profits warning robs Japan of the one thing that seemed solid and dependable in a nasty, unpredictable world.

Japan has heard astoundingly bad corporate news before, and heard it on a grand scale: the nationalisation of Resona Bank, the near-collapse of Sanyo and the “Sony Shock” of 2003 were all memorably dark days in relatively recent memory.

But what they all had in common was that much of the blame could be placed on the companies themselves: these were great names laid low by management hubris, a shoddy attitude towards risk and plain old incompetence.

Toyota, insofar as a company can be, is a national superhero. From rival carmakers to electronics firms to the local family restaurant, it is the company every businessman in Japan wants to emulate: lean, inventive, ruthless, classy and profitable.

What will shake Japan to its foundations is that Toyota is of those adjectives, except the last one. The company has not changed, Japan realised with horror today, but the world around it has.

Japanese do not trot-out the cleaning rag metaphor as a joke. The country’s long period of economic slump in the 1990s and early 2000s may have been referred to in shorthand as a “lost decade”, but for Toyota and many other unsung heroes of the Japanese economy, it was certainly not wasted.

Like prisoners with nothing to do all day but tone their muscles, Toyota led a clique of obsessive body-builders. Punished day-to-day, month-to-month, and year-to-year by deflation, tough credit conditions and domestic stagnation, they made themselves everything that the Detroit “big three” are not.

And now, as the global economy stares over the precipice, even the cream of Japan isn’t good enough to make any money. In the past, Toyota has always used its pre-Christmas statement to issue an upbeat, but humble assessment of its qualities. This year’s event, held in the same low-key hall as ever, was a red flag for the globe.

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