TOKYO - Crisis-hit Japanese auto giant Toyota Motor has asked for a government loan to help its financial unit ride out the credit crunch, an official said yesterday.
Toyota Financial Services, which provides loans to car buyers, is in consultations with the Japan Bank for International Cooperation (JBIC) but the size of the loan has not been decided, company official Mio Sugito said.
"The move is aimed at diversifying our financial resources as the international financial market is getting tighter, especially in the United States," Sugito said.
The Nikkei business daily and other media reported that Toyota's wholly-owned financial subsidiary is asking for about 200 billion yen ($2 billion).
They said the money would be used to support its operations in the United States.The move comes amid concerns that firms are finding it increasingly hard to raise funds from distressed markets and cash-strapped banks.Analysts, however, said Toyota does not face an immediate cash crunch like its U.S. rivals such as General Motors.
"This not like the case of GM," said Yasuaki Iwamoto, auto analyst at Okasan Securities."This is a positive strategy in which Toyota intends to use its credibility to secure cash flows so that it can cope with the tough situation in the United States," Iwamoto said.
JBIC's main role is to invest in projects in developing countries, but the government in December decided as an emergency measure to allow the bank to lend to Japanese companies operating in developed countries.
Investors reacted calmly to the announcement. Toyota's share price declined 10 yen or 0.33 percent to 3,060 yen, outperforming a 0.69 percent decrease in the benchmark Nikkei index.
Toyota Motor ended General Motors' 77-year reign as the world's top selling carmaker in 2008, but it has not been immune to the global economic downturn and expects its first ever loss in the current financial year to March.
Finance Minister Kaoru Yosano said yesterday the government was ready to offer $5 billion from its foreign exchange reserves of $1 trillion later this month to Japanese firms through JBIC.