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Toyota reportedly down to $18.5 billion in cash
The cash burn rate through 2008 at General Motors, Chrysler and, to a lesser degree, Ford, has been one of the big new stories in the auto business. After a disastrous third quarter, GM was down to about $11 billion and, along with Chrysler, was in danger of having insufficient cash on hand to pay bills at the end of the year.
Meanwhile, Toyota has been raking in the profits for ages now and was thought to have up to $90 billion in reserves as recently as a couple of years ago. The other day, however, John McElroy reported that Toyota may be down to only $18.5 billion in cash with rapidly spiraling debts.
The company has spent heavily on new factories and new products in the U.S. in recent years, but saw its sales plummet as much as the domestics in the second half of 2008. Its total current short-term liabilities are now roughly equal to its total current assets, and its cash reserves put the company on par with Ford. In recent months, Toyota has been moving aggressively to cut costs and budgets have been slashed company wide. The automaker famous for avoiding layoffs was also reportedly considering shedding some jobs in the U.S. and UK, but had denied those reports are true.
[Source: Autoline Detroit]
Reader Comments (Page 1 of 5)
garlinski 3:43PM (1/26/2009)
you may want to check your grammar in that bubble. not so funny this time. keep'em coming though. Camry is seriously ugly Toyota.
Reply
Sean Flanagan 4:40PM (1/26/2009)
I don't what you're talking about.
Chase 5:10PM (1/26/2009)
"we don't why" is missing a "know". Also, the second comma needs a conjunction or needs to be replaced with a period.
thomas 5:59PM (1/26/2009)
@ chase read what sean said.
carefully.
Mike P. 6:43PM (1/26/2009)
AB's just trying to capture the essence of Engrish.
I'm very exciting about this. The air feels very like flesh in Canada.
...in other news, my Japanese probably sucks just as much or more--I wonder if it's as entertaining as their English, though..?
Seminole 3:46PM (1/26/2009)
Ahem, *know.
That aside, maybe everyone will stop saying "Be more like Toyota" now.
Reply
firstplace 4:24PM (1/26/2009)
I wish they would make cars as reliable as toyota.
Kattleox 4:36PM (1/26/2009)
I wish toyota would make cars as fun as everybody else [fingers crossed for MR2 revival]
oZ 4:48PM (1/26/2009)
firstplace: Pretty much everyone does now. Toyota dropped in initial and long term quality rankings, so there are brands that are considered 'more reliable' for the modern set.
Big Rocket 4:59PM (1/26/2009)
@firstplace: I'll second what oZ wrote. One way to judge reliability, out of many ways, is to look at recalls. If you look at the number of recalls per number of cars sold, Toyota and GM were statistically tied back in 2006.
Toyota: 2.5 million US sales, 0.81 million US recalls, 32% recall rate
GM: 4.1 million US sales, 1.4 million US recalls, 34% recall rate
http://www.autoblog.com/2007/01/19/surprise-recalls-fall-in-2006/1#c3182426
Out of curiosity, does anyone have the recall and sales numbers for 2007 and 2008?
Temple 5:20PM (1/26/2009)
Toyota isn't asking, nor have they received tens of billions in government bailouts.
Also, the biggest difference is that Ford's cash reserves are largely borrowed money when in 2006 it put the entire company up in exchanged for $18 billion in financing. Also, Ford announced at the beginning of the month that their cash reserves are well under $15 billion.
No auto company is in good share right now, but the comparisons aren't apt.
Torrent 6:13PM (1/26/2009)
Kattleox: You know if that does happen, it will be a FWD 3 cylinder Plug in Hybrid with a CVT, and that Fugly, Functional and Frugal wedge shape. I call it the "3 F's".
Judy Zik 9:11PM (1/26/2009)
A couple of things you are missing.
1) Ford didn't take any bailouts. They bailed themselves out by having the brains to get the banks to lend them money knowing things could go sideways while they restructured. No car company will pull off that kind of loan now and when you run out of cash it doesn't matter whether it was borrowed or not. No cash, no company.
2) The rate of cash burn to take Toyota down from such massive reserves to this level this quickly. If this is true that kind of cash burn rate would make GM blush. Toyota might be in more trouble than we thought.
I am certainly not cheering for them to go under. Losing any manufacturer of that size would be a huge blow to the economy.
big J 9:49PM (1/26/2009)
"The rate of cash burn to take Toyota down from such massive reserves to this level this quickly. If this is true that kind of cash burn rate would make GM blush."
Yeah, that's why they've been downsizing to accomodate the ailing economy instead of waiting until the very last minute and asking the govt for money, so regardless they're still about 10 steps ahead of GM and 50 ahead of Chrysler.
People keep comparing Toyota to Detroit, which is understandable but all those people are missing one huge obvious fact: Toyota is not on the brink of bankruptcy.
grumbles 3:47PM (1/26/2009)
It's cash reserves put the company on par with Ford? What the hell kind of reporting is this, exactly?
Do you know the difference between mortgaging your entire company so you can have that cash on hand, and simply having cash reserves?
I'm now one step closer to deleting autoblog from my bookmarks forever. Anyone know a better site that isn't run by complete morons?
Reply
Mike 3:51PM (1/26/2009)
No, but have fun trying to find one.
Oh yeah, by the way, if Toyota runs their cash reserves out, they won't find financing like Ford did in '06 (except from their government who will surely not bend them over backwards like ours did) so essentially if they were unable to get loans, what's the difference if they Ford runs out of borrowed money and can't get more or if Toyota runs out of cash reserves and can't get more?
mapoftazifosho 3:53PM (1/26/2009)
Well, what you meant to write is, "Its cash reserves put the company on par with Ford."
At this point in time, it doesn't matter if the money was borrowed or not because no one is going to lend a major auto manufacturer money right now. So if Toyota runs out of capital...well...good luck getting a loan from a major financial institution...but that won't matter because the Japanese gov't won't let that industry fail...
compy386 4:18PM (1/26/2009)
@mapoftazifosho
You’re wrong about that. Ford has to pay back those loans whereas Toyota doesn’t have to pay out its retained earnings unless it wants to. The problem with the big three is that all of their cash inflows are used to service monstrous debt levels. Even then they’re going to be short. Toyota can last a lot longer in this environment with 18B in cash than Ford.
Mazda FTW! 4:25PM (1/26/2009)
grumbles - You really live up to your name dont chya? instead of calling names why not simply point out the mistake. unlike you the Autobloggers have work to do and sometimes they make mistakes. This isin't Vanity Fair. It's a blog. Looking for perfect language comprehension on a blog is akin to looking for a virgin at the Playboy mansion.
JimmyJimson 4:28PM (1/26/2009)
Well you could always visit The BS About Cars blog. There you can join them in collectively jizzing all over themselves at the prospect of domestic automakers failing. I wonder if they'll start a "Toyota death watch" series?
I quite reading at "*insert domestic automaker here* Death Watch 3 billion" or so.