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Yet it's quickly cracking under the strain. Only six weeks ago, Toyota announced it would post its first operating loss in its 70-year history, but just last week, it revised those estimates and said those losses will triple to $5 billion, causing the company's first net loss since 1950.
The rapidly dwindling U.S. car market is proving to be the bane of not only Detroit's automakers, but of the world's. Sales have plummeted for just about everyone. Toyota said that sales fell 32% in January, with Honda (NYSE: HMC ) and Nissan (Nasdaq: NSANY ) down 29% and 30%, respectively. And things were decidedly chillier in Detroit: Chrysler's sales fell a whopping 55% in January, followed by GM falling nearly 50%, and Ford (NYSE: F ) seeing a 40% decline.
Worse for GM and Chrysler is the prospect that the government may force them into bankruptcy reorganization to make sure it gets repaid the $17.4 billion leaky lifeboat it lent them in December. The Treasury is standing in line behind prior creditors like Citigroup (NYSE: C ) and Goldman Sachs (NYSE: GS ) , and it doesn't much like the view. So, unless there's an agreement to change the pecking order, the Treasury may force the carmakers' hand by throwing them into bankruptcy as a condition for more bailout aid and then use a debtor in possession loan to cut to the front of the line. Somehow, Ford is looking smarter every day for swearing off government "help."
However, GM and Chrysler haven't yet given up hope that they'll still have time to craft a viable profitability plan. Chrysler is temporarily closing three plants, whereas GM is going so far as to cut 14% of its white-collar workforce, or 10,000 salaried jobs, this year. It's also seeking to buy some of the factories from its parts supplier Delphi, which may seek its own bailout. Both GM and Chrysler have also closed down their job banks, the controversial program that paid laid-off workers to report to the factory and do tasks around plants or in the community.
The dire situation is insidiously causing foreign manufacturers to careen out of control as well. Nissan reported a net loss of $902 million for the December-ended quarter and announced it would be seeking a bailout from the Japanese government, cutting 20,000 jobs (split about evenly between Japanese and global operations), and outsourcing production from Japan to lower-cost countries like Thailand. They might have second thoughts about taking federal money after watching what is happening to GM and Chrysler. Indian automaker Tata Motors is also mulling over the possibility of cutting jobs at its Jaguar unit if sales don't turn around soon.
Yet there remains one place where car sales are robust: China. In January, China passed the U.S. in total vehicle sales for the first time ever, and Chinese carmakers BYD and Chery saw an 80% and 36% jump in car sales, respectively. But that's probably just a momentary blip that won't soon be repeated.
Just as the U.S. auto market has been stripped clean like a new car parked overnight in a bad neighborhood, much of the world's market looks just as gritty. And if things don't improve soon, Toyota may not have to wonder whether there will be any upstart seeking to push it off the throne and wear the crown.