Toyota will scale back costs on Formula One racing, but is vowing not to drop out despite expectations it will record its first yearly operating loss in seven decades. Toyota Motor Corp President Katsuaki Watanabe did not give details on how the Japanese automaker would cut spending in the glamorous but expensive F1. Toyota has not had an F1 victory in seven years.
"To keep it up at the current level is extremely difficult," he told reporters Monday at Toyota's Nagoya office.
Watanabe said F1 was a good way to attract young people. Earlier this month, Honda Motor Co, Japan's No 2 automaker, announced it was pulling out of F1.
Japanese automakers have been battered by the downturn in the US auto market, the world's biggest. The slowdown is spreading to other regions, including emerging markets, where they had been holding up.
In recent weeks, Subaru and Suzuki have both quit the World Rally Championship, citing concerns about the global economic crisis. Fuji Heavy Industries, which makes Subaru cars, announced the decision earlier this month, a day after fellow Japanese automaker Suzuki Motor Corp's departure.
Toyota is expecting to eke a net profit for the fiscal year ending March 2009, as it racks up its first operating red ink since it began reporting such numbers in 1941.
The only other time it has ever had an operating loss was unofficial, in 1938, a year after its founding.
Toyota had been on track to sell 10 million vehicles around the world, but now sales for 2008 are expected to slide below 9 million vehicles.
Honda has also slashed its fiscal year profit forecast. Its global vehicle sales will show negligible on-year growth at 3.77 million.
Honda President Takeo Fukui looked crestfallen when announcing the decision to quit F1, but he said Honda needs to focus on its core business to ride out hard times.
Last week, he reiterated the withdrawal wasn't temporary, when asked whether Honda might consider returning to F1. F1 stakeholders announced measures to reduce the costs for teams in 2009 in the wake of Honda's withdrawal and the earlier departure of Super Aguri in April.
Auto racing governing body FIA and the teams agreed to a series of changes which include longer-lasting engines, limits on expensive testing and cheaper, off-the-shelf engines for smaller teams. The FIA said the first batch of changes for the 2009 season will help the larger teams cut costs by about one third over 2008.