Toyota Motor Corp. has earned money selling cars and trucks every year since 1950. So its stunning announcement Monday that it expected to report a $1.7 billion operating loss this year confirmed fears that the auto industry is grappling with the worst global downturn in decades.

"We're facing an unprecedented emergency situation," President Katsuaki Watanabe said at a news conference in Nagoya, the largest city near the Japanese automaker's headquarters in Toyota City. "Unfortunately, we can't see the bottom."

Those are chilling words coming from a carmaker that had navigated every downturn and dip in the business cycle since a brush with bankruptcy in 1950.

"It's the first time since the Depression that all the wheels have come off all the cars," said James Womack, founder and chairman of the Lean Enterprise Institute and author of the auto industry classic, "The Machine that Changed the World."

Across the globe, from Sweden to Russia to China, automakers are seeking government help to stay afloat. Last week, President George W. Bush approved $17.4 billion in loans to General Motors Corp. and Chrysler LLC, which are running perilously low on cash.

"There's no one in the world who can make money in cars at the level sales have been for the last two months," Womack said. "It's a macroeconomic problem that exceeds the ability of even the most competent companies to deal with in the short term."

For the fiscal year ending March 31, Toyota expects to report a net profit of about $570 million -- down $5.7 billion from the company's previous forecast and a huge slide from a year earlier, when Toyota reported a net profit of $15 billion and an operating profit of $19.9 billion.

The rapid deterioration occurred just as Toyota was close to overtaking GM to become the world's largest automaker.

But even as Toyota expanded into new regions and vehicle segments, blanketing markets with products ranging from its Hino trucks to luxury Lexus sedans and fuel-efficient Corolla and Prius cars, it was vulnerable to the kind of global downturn now buffeting the industry.

Toyota announced new cost and production cuts in an effort to offset the impact of falling sales in most major markets and a rise in the yen to 13-year highs against the dollar.

Those trends also have hurt Japan's No. 2 automaker, Honda Motor Co. It said last week that it expected to show a loss for the second half of the fiscal year, although it still expects to make a profit for the full year.

Japan's leading carmakers initially withstood a slowdown in the traditionally lucrative U.S. auto market when energy prices spiked last spring.

But in the fall, when a slumping U.S. economy and a credit crunch froze demand, Japan's automakers were hit nearly as hard as the struggling domestics. In November, Toyota's U.S. sales fell 33.9 percent and Honda's slid 31.6 percent, only slightly less than the overall market's 36.7 percent plunge.

Reflecting lower demand in most regions, Toyota cut its global sales forecast to 7.54 million vehicles for this fiscal year, compared with a record 8.9 million cars and trucks sold last year.

Watanabe said the company will take steps to become so lean that it could earn money even if sales were to slip to just 7 million vehicles -- what he called Toyota's basic "bottom line."

Toyota has not reported a net loss since it began publishing financial results in the 1940-41 fiscal year. But company officials said internal documents show an operating loss in 1938, and it also had a pretax, operating loss in 1950, a crisis year when bankers forced Toyota to fire 1,500 people in Japan. That represented a fourth of its work force at the time, said Hirotaka Takeuchi, one of the authors of the book, "Extreme Toyota: Radical Contradictions that Drive Success at the World's Best Manufacturer."

Since then, the automaker has not laid off permanent staff, although it hires and sheds temporary workers that account for about 15 percent of its work force.

Watanabe said the company hopes to maintain its traditional policy of retaining permanent workers.

But the downturn may strain that commitment. "It's naïve to think that Toyota can live outside the rules of business," Womack said. "Financial gravity isn't different for them than it is for anyone else."

Moody's Investors Service said Monday it was reviewing Toyota's triple A debt rating for a possible downgrade. Standard & Poor's Ratings Services announced a similar review last week after Honda's profit warning.

Watanabe said new cost-cutting measures include a freeze on nearly all of its capacity expansion projects worldwide. He said there would be more temporary production shutdowns, including in the United States and Canada. Toyota already has said it was indefinitely postponing the start of Prius hybrid production at a plant under construction in Mississippi. The automaker also has cut executive pay and bonuses.

"Toyota would appear to be working on the basis of a worst-case scenario at the moment as it takes unprecedented steps to align supply with demand," said Ian Fletcher, a London-based analyst with IHS Global Insight.

Across the globe, all its operations are under review. "There are no sacred programs right now within Toyota," said Irv Miller, group vice president for corporate affairs at Toyota Motor Sales USA.

"Many of us see this as a tremendous opportunity," Miller said. "In good times, it becomes very difficult to do the self-assessment necessary to make significant changes. But (as) things get a little tough, it's much easier to scrutinize everything."