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:


Login or Create new account to add a comment!


More than three decades ago, the DeLorean DMC-12 was produced by the DeLorean Motor Company. However, production was stopped due to issues within the company. The car itself was decent...
by - October 27, 2016
Tesla is making sure that all models under production will receive the necessary advanced hardware that will allow them to be autonomously driven. The fitment of these advanced hardware to...
by - October 27, 2016
Wondering how fast the 2017 Chevrolet Camaro ZL1 in actual driving? To provide customers a good idea on how fast the 2017 Camaro ZL1 could really get, Chevrolet recently had...
by - October 27, 2016
So, it is official! The new Honda Clarity FCV has the longest verified range of any zero-emissions vehicle currently on the road in the United States. One of the main...
by - October 27, 2016
Many have been anticipating Mercedes-Benz Vans’ newest luxury pickup truck, the X-Class. While Mercedes-Benz has yet to reveal the official production version of the X-Class, it was kind enough to...
by - October 27, 2016