Toyota Reportedly Down To $18.5 Billion In Cash, Same Level As Ford.

[Sprint XR8]

The cash burn rate through 2008 at General Motors, Chrysler and, to a lesser degree, Ford, has been one of the big new stories in the auto business. After a disastrous third quarter, GM was down to about $11 billion and, along with Chrysler, was in danger of having insufficient cash on hand to pay bills at the end of the year.

Meanwhile, Toyota has been raking in the profits for ages now and was thought to have up to $90 billion in reserves as recently as a couple of years ago. The other day, however, John McElroy reported that Toyota may be down to only $18.5 billion in cash with rapidly spiraling debts.

The company has spent heavily on new factories and new products in the U.S. in recent years, but saw its sales plummet as much as the domestics in the second half of 2008. Its total current short-term liabilities are now roughly equal to its total current assets, and its cash reserves put the company on par with Ford. In recent months, Toyota has been moving aggressively to cut costs and budgets have been slashed company wide. The automaker famous for avoiding layoffs was also reportedly considering shedding some jobs in the U.S. and UK, but had denied those reports are true.
http://www.autoblog.com/2009/01/26/t...llion-in-cash/


Toyota’s Weakening Financials

Toyota used to be in such a strong financial position that it earned the nickname the Bank of Toyota. That description no longer replies. Also, many industry observers are under the mistaken impression that Toyota has no corporate debt. That doesn’t apply anymore, either.As part of its ambitious global expansion efforts, Toyota’s borrowing and have debt load more than doubled over the last decade. In 2000 Toyota’s current liabilities* totaled ¥5.5 trillion, right now that stands at ¥12.4 trillion.

Although the company still has a solid balance sheet, it’s not as solid as it used to be. Moreover, the company is projecting it will lose money in the current fiscal year, something that has never happened before in its history.

This helps explain why Toyota is taking drastic action in the face of the current economic downturn, such as temporarily shutting down all of its manufacturing facilities in Japan. Now, even Toyota has to worry about how much cash it has on hand.


In its most recent financial report, Toyota states that it has ¥1.8 trillion in cash, which is roughly $18.5 billion, or about the same level of cash Ford reported in its most recent financial statement.

More tellingly, Toyotas total current liabilities (short term) now match its total current assets. In the past, Toyota’s current assets always exceeded its current liabilities. When a company’s liabilities exceed its assets, it has to dip into its cash reserves to make up the difference-unless its operations are generating positive cash flow. But right now Toyota is not generating positive cash flow.

This is the same situation that the Big Three found themselves in some years back, but failed to address. Toyota is obviously attacking the problem head-on. But it’s surprising to see how close the company has come to the edge of the cliff.

* current liabilities include: borrowing, long-term debt payments, accounts payable and accrued expenses.
http://www.autolinedetroit.tv/journal/?p=2431#more-2431

[XR6_190]

I must say that I find that surprising, the way the media usually carry on most people would think Ford we're teetering over the edge, while Toyota has hundreds of billions. Refreshing to hear the raw facts for once.

[Iggypoppin']

also proves no one is safe...

[Ohio XB]

Well luckily we have the experience of the Big3 to know exactly what went wrong. Obviously, Toyota has been building vehicles that people don't want, and gas guzzlers. They've managed their company into the ground and pay their employees too much. HOW ELSE COULD THEY BE IN THE SAME BOAT AS FORD?????!!!!!!

Yeah, that's some serious sarcasm, but it makes me sick.


Let's see how much coverage this gets in the mainstream news. It sure is big news when Ford, GM, or Chrysler have the exact same situation. This is the first I have heard of this and I bet it will be a while before I hear about it on my local news or in a newspaper, where it will be a single paragraph buried on page 9.


Steve

[Bud Bud]

Originally Posted by Ohio XB

This is the first I have heard of this and I bet it will be a while before I hear about it on my local news or in a newspaper
Steve

Well Steve here is the next installment!

Cheers Bud Bud.

Japanese automakers will cut 25,000 jobs,slash output
28/1/09:

Japan's top 12 automakers expect to cut a total of 25,000 jobs in the current business year to March to cope with the industry slump, a survey said Monday.
The companies plan to reduce their combined production by at least three million vehicles from their original target for this year, according to figures compiled by Jiji Press.
Toyota accounts for about half of the reduced output, with a plan to make 1.5 million fewer vehicles, Jiji said.
The companies may announce further cuts to jobs and production before the end of the fiscal year as the recession deepens, it added.
Japanese automakers have been hit hard by weak demand due to the global economic crisis, despite being in better shape than the US Big Three -- Ford, Chrysler and General Motors -- which were forced to seek emergency aid from Washington.

Source: AAP NewsWire

[phillyc]

Originally Posted by Bud Bud

Well Steve here is the next installment!

Cheers Bud Bud.

"Japanese automakers have been hit hard by weak demand due to the global economic crisis, despite being in better shape than the US Big Three -- Ford, Chrysler and General Motors -- which were forced to seek emergency aid from Washington."


And, still the media get it wrong. AAP Newswire (a worldwide newsource) continue to perpetuate the falsehood that Ford sought emergency aid...

[Ohio XB]

Originally Posted by Bud Bud

Well Steve here is the next installment!

Cheers Bud Bud.

AAP? I am not familiar with them.

AP = Associate Press, them I am familiar with.


I agree, lumping in Ford with the others that have taken financial aid. I confronted a "journalist" about an inaccurate statement he made and he responded by splitting hairs. I pointed that out to him and he never wrote back.


Steve

[Bud Bud]

Originally Posted by Ohio XB

AAP? I am not familiar with them.

AP = Associate Press, them I am familiar with.


I agree, lumping in Ford with the others that have taken financial aid. I confronted a "journalist" about an inaccurate statement he made and he responded by splitting hairs. I pointed that out to him and he never wrote back.


Steve

Steve, AAP Stands for "Australian Associated Press" www.aap.com.au

[b0son]

Originally Posted by Ohio XB

Well luckily we have the experience of the Big3 to know exactly what went wrong. Obviously, Toyota has been building vehicles that people don't want, and gas guzzlers. They've managed their company into the ground and pay their employees too much.

The Big3 went backwards during boom times.... big difference. If the US wasnt bailing the Big3 out (its only a matter of time til Ford need help), they'd be dead in the water.

[FPV8U]

Originally Posted by b0son

The Big3 went backwards during boom times.... big difference. If the US wasnt bailing the Big3 out (its only a matter of time til Ford need help), they'd be dead in the water.

Actually of the Big 3, Ford are the only ones who really don't "Need" the package..

Since Mulley has been at the helm they have really been turning themselves around.

[Nikked]

Originally Posted by FPV8U

Actually of the Big 3, Ford are the only ones who really don't "Need" the package..

Since Mulley has been at the helm they have really been turning themselves around.

He really has done a good job.

[Ohio XB]

Originally Posted by b0son

The Big3 went backwards during boom times.... big difference. If the US wasnt bailing the Big3 out (its only a matter of time til Ford need help), they'd be dead in the water.

As stated in that post, it was sarcasm.


Yes, you are correct in your statement, that the Big3 were not making money while sales were good. That was a result of putting all their eggs in one basket, trucks and SUV's that were highly profitable and then didn't have profitable product when trucks and SUV's fell out of favor.

Ford has been investing heavily in new product and recreating themselves as an auto company. They are hitting the ground running with new innovative products that are very attractive so that when the economy turns around Ford will be at the forefront of the buyer's stops.

as far as Ford being "dead in the water", if things begin to pick up in the second half of this year I don't see Ford needing any assistance. If the economy drags on or worsens, yes, I believe they will need assistance.


Toyota is at the top of their game. What can they do? "Right-size" is their only option at the moment.


Steve

[Dave_au]

Do remember though that Ford has been riding on the wave of the sales of capital assets; namely Jaguar, Land Rover and Aston Martin, which they appeared to have exited at just at the right time.

[Wretched]

Ford still have a long way to go for improvements, which compared to Toyota is good.
Ford can still improve their efficiency of their product development and the product itself. Toyota however are at the peak of efficiency, they are the benchmark, where to for them now?

[Ohio XB]

Originally Posted by Wretched

Ford still have a long way to go for improvements, which compared to Toyota is good.
Ford can still improve their efficiency of their product development and the product itself. Toyota however are at the peak of efficiency, they are the benchmark, where to for them now?

That is a very good point. Yes, Ford has benchmarked Toyota for years. Now that Ford's quality is equal to and in some cases surpasses Toyota's quality Ford is working to BE the benchmark for quality.

Toyota's efficiency is excellent but as they approached sales volumes equal to what GM was once at they started learning the new problems that arise when an auto company gets that big. Toyota started having quality problems they didn't have before and recalls in volumes they never had before. Even Toyota could not maintain previously achieved quality levels when producing such volumes. It is a difficult task.

Now, because of the global economy and market conditions, they will have to size themselves to match the market size, just like the Big3 have done. They have invested heavily in financing new plants in the US including one that they have ceased construction of that is to build the Prius in the US. This, along with massive sales drop, is why they are financially stretched.

Very few cars are selling, period. It will be interesting to see what kind of repercussions come from lay-offs since it will cause a loss of face.


Steve

[fou_bleu]

Originally Posted by Wretched

... where to for them now?

The only other way for them possible... down...

[Yellow_Festiva]

Out of curiosity is there any way to tell how other manufacturers are going financially???

From the last year, and from what I have just seen on the roads in Korea it is fair to say that Toyota's biggest threat is Hyundai / Kia.

Any info of how the Koreans are fairing financially? I know that Ssangyong is in strife but what about the other 2?

[vztrt]

Originally Posted by Yellow_Festiva

Out of curiosity is there any way to tell how other manufacturers are going financially???

From the last year, and from what I have just seen on the roads in Korea it is fair to say that Toyota's biggest threat is Hyundai / Kia.

Any info of how the Koreans are fairing financially? I know that Ssangyong is in strife but what about the other 2?

They should release annual reports if they are publicly listed. I know Ford does quarterly reports so i'd take it the rest do as well.

[uranium_death]

THough I doubt it would happen, I'd be happy as Larry (assuming he was happy) if Toyota disappeared. That is only looking at this superficially, but one must dream.

It would be terrible for the industry though.