Japanese carmaker Toyota Motor Corp (NYSE:TM) has indicated that it is expecting profits to drop this year by 80% due to the impact of COVID-19 pandemic on car sales globally.

Toyota expects the lowest profits this year of around $4.7 billion as sales dip

Toyota, which is one of the largest automakers in the world, indicated on Tuesday that it is expecting its operating profit this year to be around $4.7 billion. This will be the least profit the company has posted in nine years. For the fiscal year that ended on March 31st, the company reported a profit of $22.3 billion, which was less what the company predicted in February.

Also, Toyota is expecting sales to drop from 9 million sold last year to around 7 million cars this year. However, this does not include the sales from the small carmakers it owns, such as Hino and Daihatsu. For now, the company has indicated that it will be hard to provide sales forecasts since that is expected to vary greatly across regions.

Besides the expected drop in revenue and sales, the company said that its profits will take a hit because of the value of the Yen. The Japanese Yen is a haven currency preferred by investors during volatile times, and in recent times it has been firming against the dollar.

COVID-19 pandemic deepened the downturn in the auto industry

Before the coronavirus crisis forced automakers to shut plants, the industry was already staring at a downturn. The coronavirus only worsened things as it forced the company to halt manufacturing by closing factories, and sales in most markets became a standstill.

Things are likely to return to normal as the company reopens its factories. It reopened some plants last month in Europe, and it will resume some production in North America after two months of closure. Interestingly Toyota is upbeat and expects a rebound of sales later in the year, and by the end of 2020, the company expects sales to hit 90% of levels witnessed previously.