Toyota Financial, the lending arm of Toyota Motor Corp., is seeking a loan from the Japanese Bank for International Cooperation, Bloomberg reported today, as the world’s largest automaker struggles to keep itself afloat as it faces its first loss since its establishment in 1950. Toyota is expected to post a 12 month loss of 350 billion yen for the period ending March 31.
The size of Toyota Financial’s loan request has not been confirmed but Japanese news outlets are pegging it at 200 billion yen, Bloomberg said. 200 billion Japense yen is the equivalent of 2.04 billion U.S. dollars.
Toyota’s financial instability is shared by other Japanese automakers. Honda Motor Co., Nissan Motor Co., Mazda Motor Co., and Mitsubishi Motor Co. are also said to be contemplating JBIC loans to boost sales.
In the United States, the country’s largest automaker General Motors told NPR today that it can’t pay its bills and may be forced into bankruptcy. GM has already received $13 billion in U.S. government backed loans.
Toyota’s and GM’s financial woes and the similar complaints of the secondary players in the auto industry suggest that the time is ripe for change. CNBC reported last week that Americans have gotten into the habit of buying or leasing a new automobile every 3-4 years. And many U.S. households have more automobiles than drivers. 10.9% of American households own 3 cars even in this tight economic climate according to CNW research cited by CNBC.
This obscene consumerism for consumerism’s sake is untenable in the long run and was bound to come to an end. Instead of trying to boost auto sales during this period of economic decline, government and the automakers need to come to grips with the new financial reality that drivers will no longer support their excess production by buying unnecessary automobiles. Logically, to accommodate this change in consumer thinking, there must be a market share loss spread across the automaker population or some automakers must cease production.
The world’s governments, instead of propping up the auto industry with public funds, should take advantage of this opportunity to encourage and financially support more responsible transit options. This is the perfect time to divert highway funds to mass transit, build bike lanes, and lead the call for reliance on bikes and mass transit for local transportation.
Sources: http://www.bloomberg.com/apps/news?pid=20601080&sid=aU9GHnz7ClHo&refer=asia; http://online.wsj.com/article/SB123616606827228383.html?mod=rss_whats_news_us; http://www.cnbc.com/id/29508409;