REPORT: Toyota Financial seeking loans from Japanese gov't
LR: Toyota Vice Chairman Katsuaki Watanabe, Toyota President Akio Toyoda and Chairman Fujio Cho
Toyota Financial Services has reportedly applied for loans equaling $2 billion (200 billion yen) from the state-backed Japan Bank for International Cooperation. Much of these funds would presumably be used to lend money to new car buyers in the United States, Toyota's largest and most profitable market. If granted, Toyota would join American automakers General Motors and Chrysler on the bailout bandwagon.
Last month, Toyota sold roughly $2 billion (200 billion yen) worth of 10-year bonds at rates much less favorable than what the automaker had previously been accustomed to. That and the aforementioned loan request are actions likely taken to shore up Toyota's falling cash reserves, which some have estimated to be as low as $18.5 billion at the end of January.
It's widely expected that Toyota will post a net loss of as much as $3.5 billion (350 billion yen) for the fiscal year ending in March. This would be the Japanese automaker's first ever operating loss for a full 12-month period, and it further proves how dire the current economic conditions are for all around the globe. Thanks to all who sent this in!
[Source: Bloomberg | Photo by Junko Kimura/Getty]
Reader Comments (Page 1 of 4)
BigMcLargeHuge 11:51AM (3/03/2009)
"If granted, Toyota would join American automakers General Motors and Chrysler on the bailout bandwagon."
Thats not completely true. First off, Toyota Financial is more like GMAC or a bank than an automaker.
Second off, this is more like the BMW/VW loan that granted more credit to car buyers... meaning there is still a demand for product, people are just having trouble taking out a loan.
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Temple 12:22PM (3/03/2009)
Also, unlike the Big 3, the chance of Toyota repaying the loan is almost guaranteed.
Also, its seeking a loan from the JBIC, which was formerly the Overseas Economic Cooperation Fund/Japan Export-Import Bank, this is not the same as getting a "bailout" from congress.
Toyota actually has to apply for it, and qualify for it, the benefit is that interest rates from the JBIC are much lower then from outside. In fact, Japanese companies frequently go to the JBIC for loans for investment overseas. Not really much to spin.
KLR 12:48PM (3/03/2009)
JBIC was specifically created and is backed by the Japanese government to assist Japanese companies operating internationally. That's continual help Japanese companies can get from their government. The US doesn't have any government backed arrangement even close to that for assistance to US based international companies. If there was you certainly wouldn't see GM and Chrysler in front of Congress.
Tourian 12:54PM (3/03/2009)
Isn't Toyota Financial a wholly owned subsidary of Toyota? IF not, who are the primary shareholders?
What's the American equivalent of this JBIC?
Still, the Toyota defenders find a way to defend them, but for what reason? Why can't you people just admit that Toyota is in the same crisis the rest of the automakers are? They stand the most to lose, they being the biggest and so heavily invested in our market?
tekd 1:19PM (3/03/2009)
@Tourian:
It's not the same as the automaker bailouts because the money is going to consumers and not towards paying Toyota's obligations. Of course it's a stimulus package, but Toyota Financial is competing against other financial firms that have already taken billions and billions in cheap government credit to underwrite loans.
There isn't a lot of credit going around, and when all the other banks making auto loans are getting free government cash you're kinda forced to go ask for loans too or you're at a horrible disadvantage.
Temple 4:38PM (3/03/2009)
@KLR
The reason why the US doesn't have a JBIC like organization is because Americans don't want to see billions of dollars of their taxpayer money that is destined to be spent abroad. Most JBIC loans over the last half decade have been granted to Japanese companies seeking funding for making factories in China and other third-world countries.
Imagine if the US government used taxpayer money to help American companies send jobs to China or India... Now $2 billion of Japanese taxpayer money is going to be invested in the US. Does America even want a JBIC-like organization?
why not the LS2LS7? 11:27AM (3/04/2009)
BigMcLargeHuge:
On your first point, they're owned by Toyota. So it's an automaker. Absolutely it's their financial arm, but that's an arm of the body. No pushing off blame here. Toyota apparently messed up badly and they're taking a handout.
On your second point, your implication there is that this is unlike a bailout of the big 3, where people DON'T want what they have to sell, and wouldn't buy their cars if credit was available. This is merely an assumption and bias of your own, there is no evidence to back this up. Every car company, top to bottom, would sell more cars if there were credit available for people to buy them with.
alex 11:49AM (3/03/2009)
Let the bashing/apologies begin! i'm gonna get some popcorn, pull up a chair, and watch the hillarity that is sure to follow!
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the vegas style guy 1:24PM (3/03/2009)
No bashing. This is because of the unions and the fact that they make crap that no one wants to buy. And Obama.
Whoops!
For a minute there I was channeling some effete lost in my own lack of reality Republican apologist history revising I hate anything American German car driving snob.
Mazda FTW! 11:50AM (3/03/2009)
Japanese car-makers are given "strategic economic stimulii" even during the best of economic times.
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Corey W. 1:09PM (3/03/2009)
A fact everybody seems to ignore.....
Jake B 3:58PM (3/03/2009)
Even Toyota is asking for loans? They aren't even saddled up with unions and monstrous medical dues. Seems to unarguably confirm GM needing government aid.
Big Rocket 5:45PM (3/03/2009)
@Jake B: Just because one (or ten) other country does something bad, doesn't mean we should do the same. Privatizing profits and socializing losses is a bad idea and a complete rip-off of the taxpayers, no matter how many other countries do it.
Nellydesign 7:04PM (3/03/2009)
Yes but holding up companies like Toyota as the paragon of automotive perfection, essentially telling American car companies, "Why can't you be like them?" while glossing over all the financial help they get from their government is ALSO wrong.
Big Rocket 8:13PM (3/03/2009)
@Nellydesign: I look at this issue differently. Since I am an American taxpayer, I only care about my fellow Americans and myself being robbed by our government to sustain bad business practices, and I couldn't care less how the Japanese, Germans, French, etc. are robbed by their governments. Just because other countries are socialist doesn't mean it would be a good idea for our country.
WarHawk 11:52AM (3/03/2009)
What? I thought the Big 3 were supposed to do as Toyota does??? Ruh-roh.
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Mike 11:53AM (3/03/2009)
LMFAO...yes yes let it begin! I can't wait to hear the imports fanboys now!
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larry a 12:54PM (3/03/2009)
Do import fanboys even like Toyota?? They seem to rave about Nissan, Subaru, and Honda...
Dave 11:53AM (3/03/2009)
OMFG WHY IS AMERICA SO COMMUNIST!?!?!?! OBAMA GIVES OUR AUTOMAKERS BILLIONS OF DOLLARZ WHILE FOREIGN COMPANIES ARE ABLE TO COMPETE ON THE BEAUTIFUL WONDERFUL FREE MARKET FREE FROM ANY GOVERNMENT INTERVENTION.
Oh, wait. The whole world is in recession and every automaker could use some help, no matter where they are from. I don't care if you're a GM fanboy or a Toyota fanboy or whatever. We can all agree things need to get better soon for the sake of our beloved car companies!
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Red 11:57AM (3/03/2009)
This really puts things in perspective as to how much money these companies put out versus how much they bring in. You're the world's most profitable automotive company and you only have $18.5 billion in available cash? To me, $18.5 billion sounds like money I can't even dream of having, but to them $18.5 billion is (not) enough to justify a loan application. I dunno if I'm explaining it right, but it's just crazy to me how all that works. And being a conglomerate with ties to the Japanese government practically since its inception, I don't see how they wouldn't get the money.
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