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Toyota seeks help from government
March 4, 2009
By Tetsuya Komatsu and Naoko Fujimura
Toyota is forecasting its first loss in 59 years and is seeking loans from the Japanese government as private investors demand up to 50 percent more in interest for the firm's debt.
The company's financial unit might ask for ¥200 billion (about R21.4 billion) in loans, public broadcaster NHK reported on Tuesday.
Toyota Financial Services spokesperson Toshiaki Kawai said the unit was in talks with the Japan Bank for International Co-operation.
The vehicle maker expects a net loss of ¥350 billion after sales of vehicles in the US, traditionally Toyota's most profitable market, plunged 31 percent in the last quarter of 2008.
Incoming president Akio Toyoda is adding to the firm's reserves as the recession also forces GM and Chrysler to get bailouts from the US government.
"Toyota should take advantage of anything it can to get through this crisis," said Hitoshi Yamamoto, chief executive of Fortis Asset Management Japan. "Money is not flowing in the capital markets."
Automakers usually raise funds through bonds and loans for their financial companies to offer loans for their customers. Kawai said the government aid would mostly be used to help offer loans in North America.
Finance minister Kaoru Yosano said Japan would use some of its foreign exchange reserves to lend to the state-owned corporation that gave financing to Japanese firms operating abroad.
Toyota follows other automakers seeking government help as sales plunge worldwide. GM has received $13.4 billion (about R140.5 billion) in US aid and is seeking more to keep operations in its home market running through February.
France granted Peugeot Citroën and Renault a total of €6 billion (R79.4 billion) in five-year loans in January.
In the UK, vehicle makers are seeking support for their finance units from the Bank of England. Mitsubishi has received subsidies from Japan's ministry of health, labour and welfare to help pay wages.
On Monday Toyota said it might cut production by 12 percent in the 2009 fiscal year.
Worldwide vehicles sales may fall 14 percent to 55 million units in 2009, according to Nissan chief executive Carlos Ghosn.
In response, automaker are shutting factories and cutting jobs. Toyota plans to halve the number of contract workers in Japan to 3 000 by the end of month. - Bloomberg
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