The Japanese gov should *not* give the loan. This is an opportunity for Toyota to throw off deadweight
That is not surprising at all considering the rapidly increasing losses at Toyota. All of the world's automotive companies are seeking government loans to help them through this recession. The difference is that only the US government has demanded public humiliation as a requirement for the loans. (For those that don't trust Al-Jazeera:Toyota seeks government loan - Mar. 3, 2009 )
Did everyone notice that the money is for their financing arm? Everyone financing a new Prius should be sure to give the Japanese government a chance to subsidize their car loan!
The only "deadweight" that Toyota would throw off would be foreign manufacturing. There is no way that Toyota is going to renege on their unwritten but very real guarantee of life-time employment for their Japanese workers.
Of course they will. Fiat, Peugeot, Renault, Mercedes, VW, and Opel have asked the EU for $40 billion Volvo and Saab have requested money from Sweden Tata has requested $1.5 billion from the UK for Jaguar and Land Rover. Etc, etc, etc, All of these companies will get the money because government know it is important to keep manufacturing in their countries.
I already answered that in post 3. No they won't. The Japanese citizens I've known are fanatical about only buying Japanese products. They would have not issue with helping a large company through a tight time. However the Japanese are also very cooperative and community oriented in general. They don't see the government as the enemy.
It's only a small step to Nationalizing these companies. We're already well on the way to Nationalizing the banks
A key question in my mind is why is Toyota asking the Japanese government? I would be hard pressed to believe that every bank in Japan thinks Toyota is a lost cause vs. being unable to lend. The US automakers may be asking because no bank wants to. The other countries may be asking because no bank can. Maybe someone can help clarify?
My sources tell me that Toyota Financing has been buying auto paper over the last year much like the subprime home loan industry was buying paper over the last couple of years. Many of those loans are toxic. Many auto auctions have entire lanes designated for Toyota repos.
I have no doubt that Toyota is having trouble getting private financing. In the current financial climate it is difficult for profitable companies to get even short term financing. Toyota's losses are large and increasing. As of 7-Nov-08 Toyota was projecting a profit for 2008 of $5.9 billion. By 22-Dec-08 they were projecting a loss of $1.6 billion. By 7-Feb-08 that projected loss was up to $3.9 billion. That is a reversal of $9.8 billion in only 3 months. Who knows what it will be by the time Toyota's 2008 fincal year ends at the end of March
At first glance, that looks bad (and it is), but 3.9 billion should be quite manageable compared to some other firms.
Losing $3.9 Billion is only manageable if you have the cash reserves to cover the difference or are able to borrow the difference. What is important is whether those loses continue to grow throughout 2009 or start to decrease. Yes Toyota is in better financial shape than some but worse than others. Volkswagen, the world's 3rd largest automaker, just announced a 2008 profit of $6 billion up 15% over 2007.
