Toyota And Maybe Honda And Mazda Asking For A Bailout

It’s not just US automakers that are in trouble these days. Toyota is asking its government for a bailout and now Bloomberg says that Honda and Mazda might do the same.

Honda and Mazda would follow Toyota Motor Corp., Japan’s biggest carmaker, in seeking loans from the government as the global recession hammers auto demand. U.S. auto sales in February slid to the lowest rate since December 1981, led by a 53 percent plunge for General Motors Corp.

Vehicle sales are down 35-40% worldwide, says the Detroit Free Press, clearly relieved that “despite their frequent depiction as the only dunderheads unable to peddle cars,” Detroit is not alone in its misery.

When Toyota is begging, it’s bad [Detroit Free Press]
Honda, Mazda May Apply for Japanese Government Loans (Update1) [Bloomberg]
(Photo:blue_j)

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  1. shoelace414 says:

    which government are they looking at getting the money from?

    • jetblack says:

      @shoelace414: Japan, of course. The article said “Toyota is asking its government.” :)

      • TouchMyMonkey says:

        @jetblack: Which is all well and good. If anyone suggested that Toyota and Honda were looking for handouts from our government, I would be all, “oh, so those Japanese carmakers operating in red ‘right to work’ states want a bailout? I wonder how the Republican congresscritters from those states feel about that after crying ‘socialism’ when it was the Detroit Three asking for bailouts.”

        But I can put that knife back into its sheath. Thanks for the clarification.

        • Balfegor says:

          @HurtsSoGood: I was all ready to raise a hue and cry myself — none of these companies should be getting a bailout, regardless of what country they happened to have been founded in all those many years ago.

          Though I hope, at least, that Toyota would have the class not to run a smarmy “Thanks for your money, suckers!” ad campaign right afterwards the way Chrysler did. That was just insult to injury for taxpayers.

    • Eyebrows McGee (now with double the baby!) says:

      @shoelace414: I too was confused and had to read that like four times. :)

  2. ZManGT says:

    It says they are asking “its” government so I would assume their own.

    Also this is a little misleading as both companies have already been given loans and money from their respective governments to help keep them running.

    • WiglyWorm must cease and decist says:

      @ZManGT: These companies, honestly, are frequently subsidized by their government. We just don’t hear about it because it’s not our pockets they’re taking the money from.

      • Anonymous says:

        @WiglyWorm: The Big 3 are also regularly subsidized by us. We still don’t hear about it even though it is our pockets they’re taking the money from. This bailout money is on TOP of the millions they were already getting from the government every year.

        RE Toyota: Toyota must be saved! At least until they release a new fuel cell version of the MR2.

        ***No, they haven’t said anything about making a new MR2, but they’d BETTER! And soon dammit!

      • ZManGT says:

        @WiglyWorm: I know Wigly. I just think it’s sad when we bash our own companies when they are actually doing a better job.

      • RedwoodFlyer says:

        @WiglyWorm: WTF is so bad about subsidies? They’re free money! If Japan wants to give Toyota $$ so that a US made Camry or Tundra (vs. a mexi-ford or Canadian GM truck), that’s money that they’re giving us, for free, that we never have to pay back, in the form of lower prices.

        People in the airline industry like to whine about Airbus getting subsidies…if it wasn’t for Airbus selling cheaper aircraft, Boeing’s prices would be higher….plus airlines such as jetBlue and Spirit – both of whom keep everyone else’s fares low via competition – wouldn’t be here.

        Putting it another way…if you were in France, and some guy said “Hey, if I give you 1000 Euros, can you hold them for me? Don’t worry, I’ll never, ever ask you to actually give it back to me, nor will I ask for proof that you haven’t actually spent it..” would you say no?

  3. TheSpatulaOfLove says:

    I’m waiting for the Detroit bashers to show up…

    *cricket*cricket*cricket*

    • cabjf says:

      @TheSpatulaOfLove: I don’t need to compare Detroit to their competitors to point out that their counting on future sales always being higher than current in order to pay for retirement benefits was just plain dumb.

      And a couple billion is a lot less than tens of billions. Plus, it’s only the finance arm that needs it (not surprising as they now have a huge number of 0 percent financing loans to take care of now). Not to mention they are not waiting until they are just about out of money to blackmail their government into action. Need I go on?

    • Saboth says:

      @TheSpatulaOfLove:

      I’ll help. Toyota is asking for 2 billion to help secure financing for its customers. GM is asking for 30 billion just to be able to stay alive, and NEEDS 2-3 billion a month just to even exist. People still want Toyota, Honda and Mazda products, which is the reason their sales have only fallen 1/2 as much as terrible companies like Chrysler.

      • Trai_Dep says:

        @Saboth: Yeah, but no one is saying it’s the Japanese workers who forced Toyota, Honda and Mazda, to be smart and deliver cars the world wants at a price we’re happy with. With a gun to the head of helpless execs forced from doing the wrong thing. Nope, it’s “Toyota & Honda are smart companies facing a temporary problem they need help with”.
        The US-Worker-Bashers are saying the reverse for the Big Three.

        So the take-away is, Execs and the corporation are responsible for good, smart decisions, but workers are solely responsible for bad ones.

        Hey, I sense parallels with Wall Street execs and US taxpayers! A trend. A trend!!

        • shadowkahn says:

          @Trai_Dep:

          Yeah, well, that’s pretty accurate isn’t it? Honda/Toyota have developed since the 70’s a loyal customer base because they make good cars that are reliable as hell. They’re experiencing a sales dip because money is tight everywhere.

          GM/Ford/Chrysler have been industriously churning out junk for 3 decades. They were already in a sales slump (let’s remember that all those Honda/Toyota/Mazda/Nissan sales used to go to the big 3) due to their crappiness. Now they’re having to deal with a money’s-tight-slup on top of the we-make-garbage slump.

  4. Jenkinsbball says:

    I thought Ford owns Mazda…

  5. dwhuntley says:

    WTF!!!!!!!!! Of course the new administration will give it to them. Might as well! Heck just print up another trillion dollars.

  6. joe18521 says:

    I just have a hard time believing that Toyota is in that kind of trouble.

    • Etoiles says:

      @joe18521: Maybe it’s like the Stride gum commercials, where they’re begging people to buy a new pack because the flavor of the old one never fades… I would run out and buy a hybrid Camry right now if I had spare money and needed a car but the ’96 Camry I already have runs like a dream. ;)

    • MentallyRetired says:

      @joe18521: Toyota is down to slightly more cash on hand than GM had last year when GM announced that bankruptcy was an option they were exploring. Companies generally can’t put away significant nest eggs for economic downturns like this because large nest eggs become targets of leveraged buyouts: where a purchasing company uses the target’s cash reserves as collateral when financing an acquisition.

    • Applekid ┬──┬ ノ( ã‚œ-゜ノ) says:

      @joe18521: It’s simple, really. If three of your major competitors got billions in handouts for cash liquidity, you’re all of a sudden at a competitive disadvantage if you didn’t get a piece of the pie.

      It’s not about needing it and feeling the hurt, it’s to stay in the same playing field.

      • Jim Topoleski says:

        @Applekid: WRONG. The problem is just like the American industry had issue with loans, so to does Japans. The difference is unlike the US industry where they loan from many banks, the Japanese industry is tied to a bank, so they have not had as big a issue with securing loans until now.

        But people are more interested in bashing blue collar workers and unions to realize its the banking industries unwillingness to put out operating loans thats causing the mess and neither the US nor the Japanese auto industry would be in trouble if companies could actually get the loans they need to operate.

        There would have been no need to infuse money into either groups had the banks not used their money to buy other banks, jets and vegas vacations and actually loaned money like it was meant to be used.

        Companies NEED operating loans. They are how companies operate when they are waiting for their product to sell. If they cant get them they have to hit their reserves (like the big three burned through and the japanese are now burning up) and once thats done then they are done.

        • Nitro378 says:

          @Jim Topoleski: Nope, I’m… pretty sure the America Three would still be in trouble regardless.

          • Jim Topoleski says:

            @Nitro378: Its a absolute FACT they would not be. They where not in trouble a year and a half ago, they only became in trouble once banks stopped issuing operating loans.

            Outdated model or not, they where turning a profit and where selling only slightly less cars than Toyota up until last year.

            • MostlyHarmless says:

              @Jim Topoleski: People were always going to drop them like a hot potato the moment money got tight and the gas prices skyrocketed. Banks could still be giving loans to these companies, but if the consumers did not have that kind of money as before, they’d move to better alternatives.

  7. Blueskylaw says:

    First US automakers now foreign makers want a bailout?
    Whatever happened to survival of the fittest?

    This is the type of bloody nonsense up with which I shall not put.

    • Bakkster_Man says:

      @Blueskylaw: When some OTHER industry (banking) fucks up the economy enough that your sales drop by more than 1/3rd, it’s no longer your fault.

      This wouldn’t be survival of the fittest, just extinction.

    • MyopicRaiderfan says:

      @Blueskylaw:

      It would be survival of the fittest if we allowed the weak to fail. I’m looking at you chrysler and possibly GM. That would allow the survivors to sell more cars, have more leverage with suppliers and workers, and be a healthy company.

      Of course we would probably pay more for cars at that point.

      • David Brodbeck says:

        @MyopicRaiderfan: Part of the problem is these companies are highly interdependent. If GM goes under, a lot of their suppliers will go under, and that will cause problems for Ford and other companies that rely on those suppliers. This is why Ford was saying a few months ago that they wanted a government line of credit, but didn’t expect to use it unless GM went under.

  8. Stephen Norris says:

    Um, US gov. =/= Japanese gov.

  9. Verucalise (Est.February2008) says:

    It’s unfortunate, really. I just bought a brand new KIA, and the 3 different times I was in the showroom the place was PACKED with people signing contracts and waiting for salespeople- it seemed they didn’t have enough staff to keep up with the demand. That dealership was selling brand new ’08 Sedonas worth $26K+ for $16K just to move them. I couldn’t even find a place to SIT. I read that Kia (or Hyundai?) actually posted profits in the 4th quarter.

    What bothers me is that some of these foreign car makers can offer a brand new basic car for $10K and the US manufacturers still are asking $14K. People want the best value for the money paid. I couldn’t find a decent incentive or rebate for anything US made.

    • Blueskylaw says:

      @verucalise:

      Those people signing contracts where actually relatives of the salespeople and where there just for you.

      • RedwoodFlyer says:

        @Blueskylaw:

        Were did you learn how to spell?

        @theblackdog: Exactly..Though I’ve never figured out why Kia has Sirius and Hyundai has XM.

        Not sure about the Kia Sedona, buy Hyundai is actually doing an awesome job….the Azera is a strong competitor to the Lexus ES 350, and the Genesis blows any Buick/Mercury/Lincoln/Caddy out of the water…and is strong competition for lexus/Mercedes…

    • The_Legend says:

      @verucalise: I just drove a Sedona rental. Biggest POS ever. I was adjusting the heat and the freaking four ways came on.

      • Verucalise (Est.February2008) says:

        @The_Legend: OMG hahahaha….I, too have turned on the hazard lights accidentally by leaning my hand on the console while going thru the radio stations. I guess, like everything else, it’s a subjective thing to rate vehicles. I personally love that darn thing.

      • trujunglist says:

        @The_Legend:

        Agreed. I rented a brand new Sedona a few months ago and that car had nothing but problems. The whole car rattled randomly and felt like it would fall apart. There was a very loud and disturbing noise coming from the muffler assembly, but only randomly. Lights worked sporadically. Buttons that were meant for one thing didn’t work or triggered something else entirely.
        Worst rental I’ve had.

    • theblackdog says:

      @verucalise: Hyundai owns Kia, they’re kind of the cheaper version of Hyundai vehicles.

  10. James Johnston says:

    1.) People who don’t properly read the articles should be revoked of commenting privileges.

    2.) I guess everything is going out the window in regards to a free economy….

    • TVarmy says:

      @James Johnston: Not really. The market’s saying that we shouldn’t have jets, since they need subsidies and bailouts from time to time, and we also shouldn’t have national trains since Amtrak constantly needs funding. The fact is that the market is now saying that cars aren’t essential and that we should let the companies go out of business. Without cars, we’ll still have horses, bicycles, small aircraft, boats… And you’d rather be riding a horse or a Cessna than a Corolla, right?

  11. Radi0logy says:

    Does anyone find it supremely ironic that the spokesperson for Mazda’s name is Toyota? Wow. He must have really kicked ass to be able to get that job.

    But on the subject at hand.. I agree with others, government subsidized corporations are fail. Let them die, and allow the strong to rise to the top.

    • joe18521 says:

      @Radi0logy:

      Reminds me of this college football team I saw last year that had a wide receiver named “Passmore,” and a running back named “Rushmore.”

      Okay, I made up that last part about the RB.

  12. mussorgsky112 says:

    Detroit may not be “alone in its misery,” but that’s only because many people are rethinking buying a new car. If they can repair the old one or buy used, why spend the extra money?
    And Detroit really is alone in that they make such crappy cars. After my Ford bit the dust, I didn’t even consider American cars. Thankfully, Honda knows how to make a solid car that runs for more than a year before needing its first repair.

    • RedwoodFlyer says:

      @mussorgsky112: Not only that, but they make them here in ‘merica even though some people like to complain about jobs blah blah. So what if their profits don’t stay in the country…it’s not like the big 3 are contributing profits to the economy…

      Detroit’s throwaway after a few years (similar to Apple w/ the iPod) worked great until someone decided to compete.

  13. TVarmy says:

    Maybe you should edit the headline? People seem to be commenting before they read the post and realize that it’s not an issue related to the current administration. Maybe have it say, “Toyota and Maybe Honda Asking for Japanese Bailouts.”

  14. HiPwr says:

    This is the slippery slope we all go down when one government props up a company supposedly competing in the free market. See Airbus vs. Boeing if you want an example.

    • Brazell says:

      @HiPwr: Entirely right here.

      • Jim Topoleski says:

        @MichaelBrazell: See Toyota and Honda… oh wait.

        You can make arguments both way bub. The Japanese auto industry wouldn’t EXIST if the Japanese government didn’t help support them initially. And up till today everyone had no problem saying “see they are doing good our blue collar workers just suck and should suffer along with their families.”

        The problem here is REALLY when one industry is allowed so much power over the others, you better regulate that industry to death so it doesnt abuse the power so much it ruines everyone.

        Deregulation did this and no one can argue otherwise now. Anyone who does is a proven idiot at this point.

        • HiPwr says:

          @Jim Topoleski: Are you claiming that Airbus, Boeing, the Big Three, or Toyota was under regulated? Your first paragraph was a valid point, but it seems like you were responding to a different topic in the last two.

          However, I’ll deviate from the topic of this discussion with you and point out that it is often the regulation itself that un-levels the playing field and allows dominance by a small number of companies. I give you the dairy industry as an example of this.

          • Jim Topoleski says:

            @HiPwr: No Im saying the banking industry was unregulated. Airbus and Boeing has their own issues, unrelated to the current situation so they should never be included. But the companies in trouble now is a direct correlation to the banking industry collapsing because of a handful of people who flogged it mercilessly for profits and then pulled out before the shit hit the fan leaving everyone else to pick up the pieces.

            • HiPwr says:

              @Jim Topoleski: I still don’t get the relationship between governments propping up private industry and banking failures. Were the Big Three or Toyota somehow relying on risky mortgages for their economic prosperity? That’s news to me.

              My point is that government should stay the hell out of private industry. Government can hardly do anything well. The best we can expect from government is that they don’t screw it up worse. And they usually can’t even achieve that.

        • Eliamias says:

          @Jim Topoleski: In part. Another huge part was the lack of enforcement of what few regulations they left on the books.

  15. cf27 says:

    Why is the US government only giving money to the “big-3″? GM and Honda are both multi-national corporations who employ a lot of people in the US as well as in other countries. They both have stock- and bond- holders in the US. They both have a lot of customers in the US. The only real difference is that Honda’s executives have Japanese names and sit in offices in Tokyo, and GM’s executives have American names and sit in offices in Detroit.

    Personally, I don’t think any government should give money to any of them. Sure, some of them would fold, but the rest would survive. In the end, we would have fewer, but stronger car companies that don’t need government bailouts. It sucks to be a loser in that world, but that’s the way competition is supposed to work.

    • Jim Topoleski says:

      @cf27: GM is a US OWNED company, Honda is a JAPANESE owned company. THATS why. Ultimately the profits of both go back to their respective companies and not to the country they are located.

    • David Brodbeck says:

      @cf27: It seems like GM’s profits are likely to stay here, whereas Honda’s are likely to go back to Japan. Of course, that’s moot if neither of them has any profits.

  16. Blueskylaw says:

    ::::::::::::::::::::::::FLASHBACK::::::::::::::::::::::::

    “I frankly don’t see how we’re going to meet the foreign competition,” said Henry Ford II, then chairman and CEO of Ford Motor (F, news, msgs), on May 13, 1971, right after the annual shareholders’ meeting. “We’ve only seen the beginning,” he predicted. Regarding Americans’ increasing preference for small cars, he declared: “Mini car, mini profits.”

  17. vladthepaler says:

    Welcome to modern economics: companies that make bad business decisions reap enormous rewards for their irresponsibility, in the form of “bailouts”. The Japanese aren’t idiots, they’ll take free money if it’s there for the asking.

  18. ElizabethD says:

    So has the Japanese car ethos of “built to last” come back to bite them?

  19. nataku8_e30 says:

    Well, at least we have a way to define which companies are Japanese and which are American – it’s based on which government they go to when they need a bailout!

  20. Brazell says:

    Japanese auto manufacturers have regularly received large subsidies and loans from their respective governments.

  21. Snarkysnake says:

    I find it ironic that Toyhondasan is asking the Japanese government for a bailout. They have in effect been susidized since WWII by rules in their home market that make it uneconomic to sell imported (ie: American,German etc.) cars there. Also,Japanese culture dictates that driving something out of the ordinary (Japanese) means that you are the proverbial nail that needs a good pounding.(The Japanese also have an ingrained belief that they build the best cars in the world-a not unreasonable belief ,btw)

    I predicted here last summer,when the first distant rumbling of a rescue for Detroit was being whispered,that any bailout by Washington would invite retaliation by our trading partners and here it is. If the Japanese government gives Toyhondasan a bailout,it will be back to status quo ante for the companies that call the U.S. their home.This just means that we may as well call our bailout a “UAW / GM Tax” to maintain the lifestyles of the management and line workers of the domestic companies.

    You know the ironic thing in all of this ? The ironic thing is that the jokers in congress that vote to hand money to any car company are more likely to DIE in office than be voted out.

  22. savdavid says:

    It was just a matter of time and timing. These companies weren’t going to miss out on free money. They weren’t going to watch their competition get handouts and them get zip. They just didn’t want to look as desperate. Smoke and mirrors. Hell, even if they were doing great, why wouldn’t they take free money?

  23. David Brodbeck says:

    Everyone who thinks GM’s salvation is in forcing them to build small, fuel efficient cars should take a look at this bailout — and also at the fact that, due to slumping gas prices, Toyota has closed one of their Prius plants.

    I’m not saying GM shouldn’t build fuel-efficient cars; they should. But we shouldn’t lock them totally into a strategy that may leave them building cars that no one wants to buy. With gas back down to $2/gallon, fuel efficiency is not going to be the top thing on people’s minds.

  24. Stream Of Consciousness says:

    Why not?? Anybody else want some taxpayer money??? I’m buying!!

  25. The_Legend says:

    Where are the (dis)honorable Senators Shelby and Corker for comments?

  26. ZukeZuke says:

    I was firmly against the Detroit bailout, but now you kind of HAVE to do this to even out the playing field… otherwise, the weak manufacturers just got an unfair advantage from Congress over the stronger ones.

    This is socialism at its finest. The govt having a large stake in the means of production as well as quasi-nationalizing our financial institutions. Where are the capitalists? :(

  27. weave says:

    When are people going to realize that the UAW is destroyin….

    Oh wait a minute.

  28. HeyYouGuyss says:

    Hey, if it’s not my tax money, go to town! I own a Civic and I think it’s the best damn thing since Happy Hour. If Japan wants to pay Honda to make great cars for me in Indiana or Alabama factories, I’m for it.

    That being said, I’ve noticed that Ford has yet to take any bailout money (aside from the usual sneaky funds the big three have been getting for years), so I would seriously consider buying Ford next time around. I think if they start now, they might have some quality by the time my Honda is no longer drive-able (it’s an ’04 so they have like 8 years).

  29. xrmb says:

    So, Toyota never made a loss before… now they have the first one ever and ask for government help… whichever governmentt it is: say the F-word to them!

  30. tworld says:

    This bailout crap has turned into a massive scam.

    How can every bloody business on the PLANET be in trouble all at the same time?

  31. Tekoa Cooper says:

    I think we need to understand the incentive policy of other auto making countries. Such as Japanese and European automakers.

    HEALTH CARE and there “SOCIAL SAFETY NET”

    Detroit automakers pay to much per vehicle and never received subsidies. Other countries get subsidies and have social healthcare and maybe even a free college education. Detroit automakers pays pension and healthcare benefits. These healthcare benefits last the entire lifetime of the employee and may cover children and a spouse. That’s a lot of people! We need to think as American’s if we need to fund social healthcare and social security. Or if we want small business’s and large corporations to continually get priced out by high and rising healthcare costs and premiums.

    The European and Asian automakers all have their own incentive programs… But. We don’t. We are starting to help the big 3. But they will ask for more. I live in the Detroit area. And it is all automation alley. We have been in a recession for the past seven years. To let the any automaking company fail here is definitely un-American. It may be the company’s fault for failure but this is absolutely bad for families. The whole middle-class has dropped out. What will replace it. I live in the Ann Arbor area and it has the lowest unemployment rate in MI. But its definitely U of M.

    What is good for the Economy? A economy that has a tide that doesn’t rise or fall too quickly. A economy that has a strong foundation. Who will watch those for whom all wealth is accumulated. We have to make them pay! Letting the rich control the economy i like letting the Incredible Hulk push a small child on a swing. It can be fun and dangerous all at the same time…..

    In short…lets look out for Main St and small businesses. We owe it to our country. Life, liberty and the pursuit of hapiness.