Strong Yen Drops Profits For Japanese Auto Makers

May 8, 2008 6:16 p.m. EST

Tokyo, Japan (AHN) - Japan's largest auto maker reported a substantial drop in its income Thursday, the first profit decline for Toyota Motor Corp. in seven years.

Toyota's net income dropped 28 percent to $3 billion for the fiscal fourth quarter ended March compared to a year ago, according to a statement from the Japanese car maker. Toyota attributed the income reduction to the strong yen and weak sales in the U.S.

Other major Japanese vehicle makers, including Honda and Mazda, all forecast lower profits for 2008 following the yen's 15 percent appreciation against the dollar for the past 12 months. Toyota President Katsuaki Watanabe said the company expects a 6.4 percent decline in sales this fiscal year.

The difficult U.S. auto market has led to a $3.3 billion first quarter loss for General Motors, but gifted Ford Motors with an unexpected profit of $100 million.

Koichi Ogawa, chief portfolio manager of Daiwa SB Investments in Tokyo, explained to Bloomberg that Toyota's losses are tied up with the slowdown in the U.S. market, which "has yet to hit bottom."