Toyota is raising spending in support of Abenomics

Article by Anita Panait, on August 14, 2013

Toyota Motor Corp. is starting to comply with a request by Japan Prime Minister Shinzo Abe for Japanese companies to spend their money in boosting the country’s economy.  Toyota has been posting profits for a series of reporting periods and recently said that its net profit for the first fiscal quarter ended June 30, 2013, almost doubled to JPY562.2 billion ($5.7 billion) – higher than the combined results at General Motors Co. and Volkswagen AG –thanks to higher sales in the United States as well as to the weakening yen.

According to data compiled by Bloomberg, the Japanese carmaker also posted an 11-percent surge in cash and marketable securities in the quarter. With lots of cash on hand, Toyota is increasing its capital spending and research expenditures 10 percent this fiscal year. It is also paying its workforce with the highest bonuses since 2008 and is planning higher dividends.

The carmaker’s moves show how Abe’s endeavors to revive Japan’s economy are gaining the backing of the country’s biggest exporter, a move that may also result to higher spending at other Japanese companies.

Toshihiro Nagahama, chief economist at Dai-Ichi Life Research Institute in Tokyo, told Bloomberg that that so-called “Abenomics” is on its way to creating a better environment for companies. He remarked that “what Toyota spends its cash pile on” may provide indications of the future of Abenomics. 

One of the biggest challenges that Abe is facing is how to make top Japanese companies do away their conservative approach and instead spend their money to spark Japan’s stagnant economy.

In fact, the companies have cash of JPY225 trillion in the first quarter of 2013, which is much larger than Italy’s economy. Haruka Kazama, an economist at Mizuho Research Institute, Japanese companies have developed a tendency to build up car reserves in preparation for uncertainties, following the financial crisis and the March 2011 earthquake and tsunami in 2011. [source: Bloomberg]

Topics: toyota

If you liked the article, share on:

Comments

Recommended

Hyundai is introducing a new 2018 Accent that is not only wider and longer, but is now also sporting a new look that is more serious than the previous model....
by - February 20, 2017
Fans and enthusiasts of the BMW M2 in the United States could now rejoice. This comes as their favorite BMW M2 is getting a limited edition version as prepped by...
by - February 20, 2017
Carmakers usually leave us thirsty for information on whether they would introduce a new, refreshed or face-lifted vehicle and on when they intend to launch it. There are reasons for...
by - February 20, 2017
Cadillac’s CT6 full-size prestige-luxury sedan is still somewhat new. It has been offered to the global auto market for two model years – 2016 and 2017. But for those who...
by - February 19, 2017
In many industries, it is the rivalries that make things exciting. In basketball for example, there is the well-known rivalry between the Los Angeles Lakers against the Boston Celtics. For...
by - February 19, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries