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Toyota chief says he’s looking at spending cuts as profit slides

Toyota President Akio Toyoda introduced the 2018 Toyota Camry earlier this year at the North American International Auto Show. A back-to-back profit decline forecast for Toyota would be the first for Japan’s largest automaker since 1994 and a setback for Toyoda, who has made it a goal to insulate the company from the boom-and-bust cycles in the auto industry.
Toyota President Akio Toyoda introduced the 2018 Toyota Camry earlier this year at the North American International Auto Show. A back-to-back profit decline forecast for Toyota would be the first for Japan’s largest automaker since 1994 and a setback for Toyoda, who has made it a goal to insulate the company from the boom-and-bust cycles in the auto industry. AP

Toyota President Akio Toyoda said the automaker may have to take a closer look at which areas to invest after forecasting profit will decline for a second straight year.

“In an environment where sales are stagnating, it’s tough that we need to invest in areas which won’t generate profits due to paradigm shifts,” Toyoda said at a briefing in Tokyo on Wednesday, without being more specific. “We need to make the decision to look at where to stop when sales are stagnating.”

A back-to-back profit decline would be the first for Japan’s largest automaker since 1994 and a setback for Toyoda, who has made it a goal to insulate the company from the boom-and-bust cycles in the auto industry. Toyota posted a loss in 2009 after the collapse of Lehman Brothers Holdings Inc. sent the global economy into a downward spiral.

Part of the problem, the 61-year-old executive says, is Toyota’s size and history. Despite creating in-house companies last year to speed up decision-making and make the automaker more responsive to changes in the industry, it’ll take more time before the results are apparent, Toyoda said.

“We posted a loss after the Lehman shock. The fact that we troubled many of our stakeholders then has been rubbed in my soul,” Toyoda said.

Toyota could look to cut back on spending more on conventional cars and instead focus on hybrid, plug-in hybrid and electric vehicles, according to Edwin Merner, president of Atlantis Investment Research Corp., which owns the automaker’s stock. “If you don’t have these things, then you could end up being at a very big disadvantage,” he said.

Toyota forecast operating profit to fall 20 percent to 1.6 trillion yen ($14 billion) in the fiscal year through March, based on expectations for an increase in U.S. incentive spending and the yen appreciating to 105 yen to the dollar. The automaker said it will buy back as much as 250 billion yen of its shares from May 17 to Aug. 31.

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