Toyota, Facing First Loss in 59 Years, Seeks Aid From Japan

[RunInRed 19,662]

How about this article for some good global perspective about the economic times we are living in...it looks like it is not just the American auto companies who are seeking "bailouts" ...

March 3 (Bloomberg) -- Toyota Motor Corp., forecasting the first loss in 59 years, is seeking loans from the Japanese government as private investors demand up to 50 percent more in interest for the company’s debt.

The company’s financial unit may ask for 200 billion yen ($2 billion) in loans, public broadcaster NHK reported today, without saying where it got the information. Toyota Financial Services Corp. is in talks with state-owned Japan Bank for International Cooperation, said Toyota Financial spokesman Toshiaki Kawai without confirming the timing or amount.

The carmaker expects a net loss of 350 billion yen after vehicle sales in the U.S., traditionally Toyota’s most profitable market, plunged 31 percent last quarter. The global recession has also forced General Motors Corp. and Chrysler LLC to get bailouts from the U.S. government.

“Toyota should take advantage of anything it can to get through this crisis,” said Hitoshi Yamamoto, chief executive officer of Tokyo-based Fortis Asset Management Japan Co., which manages $5.5 billion in Japanese equities. “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. The government aid would mostly be used to help offer loans to customers in North America, Toyota Fiancial’s Kawai said.

Toyota sold 80 billion yen in 10-year bonds priced to yield 2.012 percent last month. That compares with 150 billion yen of 10-year bonds sold in August 2002, priced to yield 1.337 percent.

Government Aid

Japan will use some of its foreign-exchange reserves to lend to the state-owned corporation that gives financing to Japanese companies operating abroad, Japanese Finance Minister Kaoru Yosano said today.

Toyota follows other carmakers seeking government help as sales plunge worldwide. GM has received $13.4 billion in U.S. aid and is seeking more to keep its operations in its home market running through this month. France granted PSA Peugeot Citroen and Renault SA a total of 6 billion euros in five-year loans last month. In the U.K., carmakers are seeking support for their finance units from the Bank of England. Mitsubishi Motors Corp. has gotten subsidies from Japan’s Ministry of Health, Labor and Welfare to help pay wages, as it cuts domestic production.

Slashing Production

Toyota, the maker of the Corolla compact, may slash production 12 percent next fiscal year, it said yesterday. Worldwide vehicles sales may fall 14 percent to 55 million units in 2009, according to Nissan Chief Executive Carlos Ghosn.

The Toyota City, Japan-based company has 2.34 trillion yen in loans and bonds maturing this year, according to data compiled by Bloomberg. The company had 2.3 trillion yen in cash reserves as of Dec. 31.

The extra yield over government debt of similar maturity that investors demand to own Toyota’s 1.22 percent bond due 2011 has more than doubled to 56.75 basis points as of yesterday from September according to data compiled by Bloomberg.

Toyota’s sales in Japan plunged 32 percent last month. In the U.S., sales also dropped 32 percent in January.

Toyota fell 0.3 percent to 3,060 yen, as of 1:44 p.m. in Tokyo. The shares have risen 5.3 percent this year compared with a 19 percent drop in the benchmark Nikkei 225 Stock Average.

In response, automakers are shutting factories and cutting jobs. Toyota plans to halve the number of contract workers in Japan to 3,000 by March 31. GM last month said it is cutting another 47,000 jobs globally, as it reported a $30.9 billion annual loss. Volkswagen AG, Europe’s largest carmaker, on Feb. 28 said it will cut all 16,500 temporary jobs globally and shuttered five factories in Germany last week.

http://www.bloomberg.com/apps/news?pid=206...&refer=home

So the question then becomes, if Toyota, who supposedly has been making the right auto decisions the past decade (quality fuel efficient cars), also needs government assistance, why is no one busting their chops and griping about their union contracts, etc? And for all you "free market" guys, should Japan refuse to assist Toyota?

[jw 4 au 548]

How about this article for some good global perspective about the economic times we are living in...it looks like it is not just the American auto companies who are seeking "bailouts" ...

March 3 (Bloomberg) -- Toyota Motor Corp., forecasting the first loss in 59 years, is seeking loans from the Japanese government as private investors demand up to 50 percent more in interest for the company’s debt.

The company’s financial unit may ask for 200 billion yen ($2 billion) in loans, public broadcaster NHK reported today, without saying where it got the information. Toyota Financial Services Corp. is in talks with state-owned Japan Bank for International Cooperation, said Toyota Financial spokesman Toshiaki Kawai without confirming the timing or amount.

The carmaker expects a net loss of 350 billion yen after vehicle sales in the U.S., traditionally Toyota’s most profitable market, plunged 31 percent last quarter. The global recession has also forced General Motors Corp. and Chrysler LLC to get bailouts from the U.S. government.

“Toyota should take advantage of anything it can to get through this crisis,” said Hitoshi Yamamoto, chief executive officer of Tokyo-based Fortis Asset Management Japan Co., which manages $5.5 billion in Japanese equities. “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. The government aid would mostly be used to help offer loans to customers in North America, Toyota Fiancial’s Kawai said.

Toyota sold 80 billion yen in 10-year bonds priced to yield 2.012 percent last month. That compares with 150 billion yen of 10-year bonds sold in August 2002, priced to yield 1.337 percent.

Government Aid

Japan will use some of its foreign-exchange reserves to lend to the state-owned corporation that gives financing to Japanese companies operating abroad, Japanese Finance Minister Kaoru Yosano said today.

Toyota follows other carmakers seeking government help as sales plunge worldwide. GM has received $13.4 billion in U.S. aid and is seeking more to keep its operations in its home market running through this month. France granted PSA Peugeot Citroen and Renault SA a total of 6 billion euros in five-year loans last month. In the U.K., carmakers are seeking support for their finance units from the Bank of England. Mitsubishi Motors Corp. has gotten subsidies from Japan’s Ministry of Health, Labor and Welfare to help pay wages, as it cuts domestic production.

Slashing Production

Toyota, the maker of the Corolla compact, may slash production 12 percent next fiscal year, it said yesterday. Worldwide vehicles sales may fall 14 percent to 55 million units in 2009, according to Nissan Chief Executive Carlos Ghosn.

The Toyota City, Japan-based company has 2.34 trillion yen in loans and bonds maturing this year, according to data compiled by Bloomberg. The company had 2.3 trillion yen in cash reserves as of Dec. 31.

The extra yield over government debt of similar maturity that investors demand to own Toyota’s 1.22 percent bond due 2011 has more than doubled to 56.75 basis points as of yesterday from September according to data compiled by Bloomberg.

Toyota’s sales in Japan plunged 32 percent last month. In the U.S., sales also dropped 32 percent in January.

Toyota fell 0.3 percent to 3,060 yen, as of 1:44 p.m. in Tokyo. The shares have risen 5.3 percent this year compared with a 19 percent drop in the benchmark Nikkei 225 Stock Average.

In response, automakers are shutting factories and cutting jobs. Toyota plans to halve the number of contract workers in Japan to 3,000 by March 31. GM last month said it is cutting another 47,000 jobs globally, as it reported a $30.9 billion annual loss. Volkswagen AG, Europe’s largest carmaker, on Feb. 28 said it will cut all 16,500 temporary jobs globally and shuttered five factories in Germany last week.

http://www.bloomberg.com/apps/news?pid=206...&refer=home

So the question then becomes, if Toyota, who supposedly has been making the right auto decisions the past decade (quality fuel efficient cars), also needs government assistance, why is no one busting their chops and griping about their union contracts, etc? And for all you "free market" guys, should Japan refuse to assist Toyota?

Well several initial thoughts about why no one may be griping about Toyota:

1. They are not asking the US government for any money, even though we are thier biggest market.

2. They are only asking for $2B.

3. They do not have union contracts.

4. They are subpar to Honda.

Seems these NASCAR manufacturers are having a tough time. Any correlation?

[RunInRed 19,662]

Well several initial thoughts about why no one may be griping about Toyota:

1. They are not asking the US government for any money, even though we are thier biggest market.

2. They are only asking for $2B.

3. They do not have union contracts.

4. They are subpar to Honda.

Seems these NASCAR manufacturers are having a tough time. Any correlation?

1. Exactly. It is not just the U.S. automakers who are struggling.

2. "Only $2 Billion?" Talk about a sign of the times.

3. I was being facetious about the union deal...but it's worth realizing, even with lower labor costs, in these trying times they are still needing assistance.

4. Honda vs. Toyota...hmmm Is that like a Ford vs. Chevy discussion? Seroiusly though, I do not own either one so I will leave it up to some one else to discusss which rice rocket is best

[autigeremt 7,550]

Japan tried the "spend, spend, spend" theory and lost their collective arses in the "Lost Generation" of the 90's. Toyota will have to retool and downsize like the rest of them.

That said, the reason for their demise is our demise. This country is causing the global recession, and therefore everyone feels it. Root cause: Bad oversight by our government+greedy elites+entitlement mentality=housing crisis.

That's the root cause, and everyone is feeling it because the world invested in America.