It has been fifty years since Toyota first began to sell cars in the United States, an automaker who has transformed itself from a builder of cheaply made, small cars into a world class power. Indeed, Toyota is the new #1 automaker in the world, the largest producer of passenger cars on the planet.Toyota’s meteoric rise was hastened by the gradual decline of General Motors, who had been the world’s biggest producer of cars even before Toyota was founded seventy years ago. Not to take anything away from Toyota, but GM’s slide in recent years allowed Toyota to surge to the top at a pace quicker than anyone had envisioned.

In its long history Toyota has been profitable every single year, including those years when Japan was embroiled in a bitter war. Today, the company’s products are available all around the world, giving the automaker an unprecedented reach and a global position that many automakers would envy.

Alas, the good fortunes of the world’s largest automaker are turning, though the change is relatively small. This fiscal year, Toyota is expecting to lose money the first time in its history that it will be reporting a loss for the year. Toyota hasn’t said what they expect their loss to be as they won’t be closing their books until March 31, 2009. Still, to warn investors this far away from the end of the fiscal year underscores just how difficult a year it has been for Toyota.

Toyota’s losses for the year can be attributed to a few events including the worldwide recession and the accelerating value of the yen versus other currencies including the American dollar. This latter problem is making it more expensive for Toyota to compete, reducing their profits which is leading to losses.

One other area where Toyota has been seeing trouble is with their fleet of large vehicles. Ever since the automaker decided to go toe to toe with General Motors, Ford and Chrysler by building big trucks and sport/utility vehicles, they’ve exposed themselves to a downturn especially when gas prices surged earlier this year. Honda, on the other hand, has minimized its losses, for the simple reason that they avoided selling vehicles larger than its Honda Pilot sport/utility model or Honda Odyssey minivan.

Despite the current problems facing Toyota, they are in excellent position to capitalize on the markets when things improve beginning late next year. By then, General Motors and Chrysler should be pared back allowing Toyota to gain an even greater foothold in the profitable American market. Of course, the automaker must realize that a backlash against the company could be brewing, one that could pit Ford and General Motors against all comers.

2009 will be an interesting year to see - one that may offer other surprises across the automobile spectrum.