Coronavirus: Toyota forecasts 80% drop in profit this year due to pandemic

Toyota has warned that it expects operating profit to plunge by 80% this year due to the effect of coronavirus on car sales.

The Japanese carmaker is anticipating a fall to 500bn yen (£3.77bn) for the financial year ending in March 2021, compared with 2.44tn yen (£18.4bn) a year earlier.

Toyota, like other global manufacturers, is grappling with the economic impact of coronavirus , which has forced car factories to close and sapped demand for new vehicles.

"The coronavirus has dealt us a bigger shock than the 2008 global financial crisis," Toyota President Akio Toyoda said.

"We anticipate a big drop in sales volumes, but despite that we are expecting to remain in the black. We hope to become a leader of the country's economic recovery."

Toyota is also forecasting that global sales will fall to a nine-year low of 8.9 million vehicles in 2020/21, compared with 10.46 million in the financial year that's just ended.

Demand has dried up in countries where many residents are still being told to stay at home or only travel if it is essential.

Even potential customers are more cautious because COVID-19 has triggered job losses and economic uncertainty.

Damage from the pandemic also caused Toyota to lose 145bn yen (£1.1bn) in operating profit during the latest quarter - wiping out savings achieved through earlier cost-cutting.

Sales are expected to struggle into December before returning to 2019 levels next year.

Despite the dire forecast, Toyota said spending on research and development would remain unchanged, with operating officer Koji Kobayashi adding: "We cannot stop investing in the future."

Ample cash reserves mean Toyota is potentially better prepared for a tough year than its rivals.

Carmaking rivals Honda and General Motors have postponed their financial forecasts - blaming uncertainty caused by the coronavirus.

The last time Honda did this was after the 2011 tsunami, earthquake and nuclear disaster, which hit a part of Japan where Honda has factories.

President Takahiro Hachigo said: "Honda has faced serious problems before, and Honda has overcome them before. We will do it again, working as a team at Honda."