Japan's troubled Toyota seeks loan

Car manufacturer expects to report first annual loss in almost six decades.

    Investors reacted calmly to reports that Toyota was seeking a loan from a government-backed bank [EPA]

    Toyota has projected it will report a loss of $3.6bn at the end of its financial year in March, its first annual loss in nearly six decades.

    Japan's Nikkei business daily reported that the loan would be used to support Toyota's operations in the US.

    The move comes amid concerns that firms are finding it increasingly hard to raise funds from distressed markets and cash-strapped banks.

    "Our market forecast for greater Europe is for about 15 million [units] instead of about 21 million last year, which corresponds to a fall of 30 per cent"

    Thierry Dombreval, Toyota's vice-president for Europe

    Toyota has said it expects its global production to fall by about 12 per cent in the next business year.

    A spokeswoman said the company expects to make 6.2 million vehicles next year, down from 7.08 million this year.

    Thierry Dombreval, Toyota's vice-president for Europe, said: "Our market forecast for greater Europe is for about 15 million [units] instead of about 21 million last year, which corresponds to a fall of 30 per cent."

    "We hope to gain market share with new products that will be launched in January, February and March, and which should help us conquer market share, but without compensating for the 30 per cent drop in the available market," Dombreval added.

    Dombreval said the company was not planning job cuts in Europe and is still counting on "six figure volume" on the continent in 2009 as well as a six per cent market share against 5.3 per cent last year.

    Toyota, which makes the Camry sedan and the Prius hybrid, had been growing steadily before the US financial crisis caused plunging global demand.

    This, coupled with a strengthening yen, has drastically reduced earnings.

    Investors calm

    Japan's finance ministry said on Tuesday that it would provide an additional $5bn from its foreign reserves this month to the Japan Bank for International
    Co-operation, to make sure there is ample cash available for needy businesses.

    Kaoru Yosano, the finance minister, also said the ministry stands ready to raise the money pool available for lending from $8.2bn to $12bn to help companies ride out the deepening global slump.

    But investors reacted calmly to the announcement.

    Toyota's share price declined only 0.33 per cent, outperforming a 0.69 per cent decrease in the benchmark Nikkei index.

    Analysts called the company's talks with the bank a "positive move" to secure cash flow in a difficult market. 

    Toyota is still doing better than US car makers General Motors and Chrysler, which combined have received $17.4bn in emergency loans from the US government, and requested an additional $21.6bn in aid last month.

    SOURCE: Agencies


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