Toyota Seeking Government Bailout in Japan
Tuesday, March 03, 2009
TOKYO — Toyota’s financing unit is in talks with a Japanese government-backed bank on possible lending, the automaker said today, underlining the serious woes facing the car industry amid plunging global sales.
Toyota Motor Corp. said no details had been decided. Kyodo News and NHK-TV reported earlier in the day, without identifying sources, that Toyota’s auto loan unit, Toyota Financial Services, had asked for a $2 billion government loan.
The Japan Bank for International Cooperation declined comment on the reports, saying it does not comment on individual company matters.
The bank started to help cash-strapped Japanese businesses last year in the wake of the global financial crisis. Some companies have been struggling for cash ahead of the fiscal year end of March 31.
The Finance Ministry said today it will provide an additional $5 billion from its foreign reserves this month to the Japan Bank for International Cooperation, to make sure there is ample cash available for needy businesses. Tokyo has about $1 trillion in foreign reserves.
Finance Minister Kaoru Yosano also said the ministry stands ready to raise the money pool available for lending in yen from $8 billion now to $12 billion to help companies ride out the deepening global slump.
Toyota, which makes the Camry sedan and the Prius hybrid, had been growing solidly before the U.S. financial crisis hit last year. But now it is expecting a $3.5 billion loss for the fiscal year through March, as plunging global demand and a strengthening yen batter earnings.
Toyota’s projected red ink for the fiscal year through March would mark its first such annual net loss since 1950, and a sharp contrast from the record $1.7 billion profit it racked up the previous year.
Toyota is still faring better than General Motors and Chrysler, which together have received $17.4 billion in emergency loans from the U.S. government, and asked for an additional $21.6 billion in aid last month.
Nissan Motor Co. has said that it is considering various types of government aid, but it declined to say today whether it was requesting for Japan Bank for International Cooperation loans. Nissan has forecast a $2.7 billion net loss for the fiscal year through March.