Toyota Seeks Loans From Japan

Toyota Seeks Loans From Japan

You know the economic environment is tough all over when formidable Toyota goes hat-in- hand to the Japanese government for a handout.

In fact, public broadcasting station NHK in Japan, reported that Toyota, which expected to report its first loss in history for the fiscal year that ends March 31, has asked the Japanese governments to loan about $2 billion to Toyota Financial Services because private investors are demanding up to 50 percent or more in interest for the company's debt.

The move is seen by analysts to squirrel away some cash if the economy turns worse than expected and to generate funds so Toyota can make car loans to its North American vehicle buyers.

It does appear Toyota is bracing for the worst. It announced Monday it was slashing production by 12 percent in its next fiscal year, beginning April 1; it is cutting jobs; has shaved executive pay; and has installed a number of new people in management positions to accelerate cost-cutting.

Toyota joins a long line of global automakers to seek loans from their national governments. General Motors and Chrysler have received U.S. government loans. France has given loans to PSA Peugeot Citroen and Renault. Automakers are seeking loans from the government in the U.K.

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.