With the April 15 tax deadline just a few months away, our US readers will be faced with a decision should they get a refund: save or spend? It seems this issue is one many of us face whenever there's a windfall, trying to decide whether we should set the money aside in an account of some sort or use it as a down payment on a new car or a trip to the Apple store. Unsurprisingly, major corporations face a similar, albeit more complex, issue.

Take Toyota, for example. With President Akio Toyoda at the helm, the Japanese manufacturer has gracefully weathered recalls and natural disasters, all while turning beaucoup profits. Last quarter, profits quintupled to 434.4-billion yen ($4.3-billion USD), according to Bloomberg. Toyota also upped its forecast for the end of fiscal year 2013 (which ends on March 31 for Japan), to a record 1.9-trillion yen (about $18.8 billion). Now, the Japanese brand is reportedly sitting on a cash pile of nearly $40 billion, leaving Toyoda-san in an envious predicament – what should the company do with all that money?

Some think Toyota should be doing something, anything with that big stack of cash.

Some think Toyota (and Toyoda) should be doing something, anything with that big stack of cash. "Capital efficiency is not improving as fast as the fundamental improvement of Toyota," Takaki Nakanishi, founder of Nakanishi Research Institute in Tokyo, told The Detroit News. "So I am not happy, but that's how Toyota is." Nakanishi advocates either investments in existing facilities or construction of new factories, as well as dividend payments or stock buybacks.

According to The Detroit News, Toyota has already said it will pay up to 30 percent of its income in dividends, and that new factory construction has been paused until 2015. "Our fundamental approach to production is to build cars where the demand is," said Shino Yamada, a Toyota spokeswoman. "Based on this idea, we are working to maximize the utilization and productivity of existing plants and facilities."

Part of the push to spend money is the belief among analysts that Toyota is lagging behind in production capacity, particularly in China, where it's faced anti-Japanese resentment that dates back to World War II. According to the report, Toyota only plans to increase Chinese capacity to 990,000 units by 2015. Volkswagen, meanwhile, is investing $19 billion in China, while General Motors is targeting an $11 billion investment, allowing both brands to produce millions of vehicles.


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  • 45 Comments
      bonehead
      • 10 Months Ago
      make a supra and sell it at a loss. money well spent
      mapoftazifosho
      • 10 Months Ago
      Supra...
      Kay Vee
      • 10 Months Ago
      As stated in the article, investing in production capacity only makes sense if the demand is there. Maybe they could invest extra in R&D, more specifically in the fields of fuel-cell technology and autonomous vehicles. For the first one it might not be a bad idea to grease governments in countries where Toyota has a relatively big market share to erect a larger and more efficient network of charging stations. As for the latter one it could be interesting to take a leading role in setting out a juridical reference map, given the fact that autonomous vehicles have many governments dazzled in terms of liability. And of course investing in the actual technologies of both is a good idea either way. Also, maybe they could consider setting up TRD as an autonomous company for producing relatively affordable fun cars aimed at the motoring enthusiast. There is definitely some good money to be made with affordable drivers cars, and it wouldn't hurt the somewhat dull good house-father Toyota currently has. Especially not if you take into consideration the fact that there's a whole new generation of young people on the horizon to whom 'fun' has pretty much the same meaning as 'God'. Sure, they have Scion to target the younger people over in the USA, but over here in Europe, Toyota isn't exactly the most appealing brand for those in the market for a fun vehicle. I think that one global brand to serve those people is a good idea. And of course, handing out some extra cash to the ever-greedy crack-addict-like shareholders isn't a bad idea either. Let it roll Toyota, let it roll.
        SloopJohnB
        • 10 Months Ago
        @Kay Vee
        Buy Daimler or Porsche.
          hokkaido76
          • 10 Months Ago
          @SloopJohnB
          How about no (screw those companies). What they should do is take some of that money and buy a stake in Mitubishi's car division. Additionally, they should spend some of that money on new engines and strengthening their pickup truck offerings
        Kay Vee
        • 10 Months Ago
        @Kay Vee
        Hmm, there is no option to edit comments it seems? I forgot to put in the word 'image' somewhere in my previous comment. Eh well.
      kajohns1964
      • 10 Months Ago
      Obama should take it from them and "invest" in the poor.
      m_2012
      • 10 Months Ago
      A few more recalls should cut into that quite nicely. I am sure they will have no problem with that.
        Dean Hammond
        • 10 Months Ago
        @m_2012
        sadly Toyota is not the only manufacturer, albeit the one in the news the most. And most of the time the issues can be narrowed down to a substandard run of parts supplied by an outside entity/ supplier....such is the complexity of todays vehicles that it has to be nigh impossible to maintain a standard of QC that makes one immune to recalls of any type...
      Luke
      • 10 Months Ago
      It's easy to make money hand over fist when your government is artificially deflating the value of your currency. They'd better keep quiet or Uncle Sam will make moves to even the playing field.
        hokkaido76
        • 10 Months Ago
        @Luke
        The U.S. deflates/manipulates its currency as well. Cut the nationalist BS.......
        vripper
        • 10 Months Ago
        @Luke
        Right. Never mind the fact that Toyota is a very efficient company that sells a gazillion cars per year.
      rsxvue
      • 10 Months Ago
      Invest it in R&D and more fun to drive cars.
      Nick
      • 10 Months Ago
      Take that money and make sure a new Supra is available ASAP!
      Hoale
      • 10 Months Ago
      Invest heavily in R&D so that they can make better products then everyone else and watch the cash pile up again. Also invest in a turbocharged FRS and diesel engine options for the Tacoma and Tundra.
      normc32
      • 10 Months Ago
      Turbo-4's for everyone!! A couple of recall related class action suits would lower that in a hurry. Toyota shows no signs of reliquishing top recall spots anytime soon.
      q1ford
      • 10 Months Ago
      I can't believe the people buying this junk with all the people they hurt in the gas pedal recall. To bad the AMERICANS forgot about WORLD WAR II. Send them back to japan...
        free_spirit
        • 10 Months Ago
        @q1ford
        Another crazy racist
        Avinash Machado
        • 10 Months Ago
        @q1ford
        America is no longer at war with Japan. Don't forget about Hiroshima and Nagasaki too.
        oneviwatara
        • 10 Months Ago
        @q1ford
        What the crimes that been commmitted by white Americans on Native Indians,Hawiians,Filipinos,Vietnamese,Koreas,Afghans,Pakistans,Iraqis,Libyans,etc??
      icemilkcoffee
      • 10 Months Ago
      I can imagine Akio Toyoda swimming in a giant Olympic sized pool filled with dollar bills, just like Scrooge McDuck.
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