Every day we hear in the news about how terrible the economy is doing and how the Big Three is on the brink of bankruptcy in Detroit.  But things must be getting out of hand when even Toyota, the world’s most profitable automaker, announces that it suffered major profit loss.

Toyota’s income dropped a dismal 437 billion Yen ($4.4 billion USD) from the year prior for fiscal year ending in March. Making it their first net loss in 72 years since Toyota was founded.  This shows that even historically strong players in the market are not immune to the current recession.  The loss comes only one year after taking over GM for the top automaker in the world based on sales.

The car maker announced this week that they will be cutting their production by almost 30 percent, causing a significant number of jobs to be eliminated.  Both Toyota and Lexus brands will be affected since the sales of both companies took a hit of almost 30 percent. The majority of jobs lost this year will be overseas in Oye and Thailand. However, between the two factories Toyota is expecting to eliminate 15 percent of their workforce.

There are a many different reasons for Toyota’s loss. All over the world and especially in the US, people are just not able to buy cars at the moment.  Unemployment rates in the US are at some of the highest rates in decades.  Those who are lucky enough to have jobs are even taking major pay cuts in their salary.  On a global scale, overall new car sales are down in the US and many other countries in Europe, South America and Asia.

Another factor in Toyota’s profit loss is the fluctuations in the money market.  The Dollar is at a 13 year low against the Yen at almost 100 Yen to a Dollar. The prices of raw materials used are majorly affected and with the value of the dollar dropping, we see how the U.S. crisis has sent a ripple effect around the world.

However, what goes down must come up and history has shown that economic issues like this come and go. Despite the recent downturn, Toyota does have plans for the future. Even though their homeland competitor Honda recently introduced the new and improved Honda Insight Toyota is already in the works of building a smaller more affordable version of the Prius. Toyota knows that it is imperative to retain customers from their main rival, so they will have to position themselves to put up a strong fight coming out of this downturn.

Considering the economic condition of the world and the major struggles of other car companies, it is not a complete surprise that Toyota would end up feeling the pinch.  It is less than a year until we will be in a new decade and even though things are tough now it is intriguing and exciting to see what our car companies have in store for us.  As cliché as it may be, it’s true when they say only time will tell.

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