Toyota Motor Corp. said Wednesday it may invest in Mitsubishi Heavy Industries Ltd.’s project to build a regional jetliner that would be the first commercial aircraft produced domestically in around four decades.
Toyota, Japan’s No. 1 automaker, is “considering a request received from Mitsubishi Heavy for investment (in the project). But no decision has been made,” Toyota spokesman Toshiaki Hori said, declining comment on when a final decision may be made.
Toyota’s possible participation is likely to boost Mitsubishi Heavy’s project to develop Japan’s first domestic passenger aircraft since production of the YS-11 twin turboprop ended in 1973.
The comments followed media reports that Toyota will invest ¥10 billion in a new company MHI plans to set up in April to raise funds to develop the Mitsubishi Regional Jet.
Mitsubishi will reportedly take a 60 percent stake in the company, capitalized at around ¥100 billion.
Mitsubishi Heavy has said the 70- to 90-seat MRJ will enter service in 2012 if there is a commercial launch. The development costs are expected to total ¥150 billion.
Depending on how many orders it gets, it plans to decide this spring whether to commercialize the project. MHI said it is also asking other firms to invest in the scheme.
Industry watchers welcomed the news.
“Any investment by Toyota would help Mitsubishi Heavy to raise funds,” said Teruhiko Nishimura, a director at Credit Suisse Securities (Japan) Ltd. who is covering the heavy industry sector.
Any involvement by Toyota, which strives for fuel efficiency, will also help attract attention to the eco-friendly jet, he said.
With new Geared Turbofan engines made by Pratt & Whitney of the U.S. and use of carbon fiber composite materials, which are much lighter than conventional metals, the jet will have extremely low emission levels compared with current regional jets and will achieve greater fuel efficiency, according to Mitsubishi Heavy.
But even if Mitsubishi Heavy gets Toyota’s funding, global competition for the aviation market is very harsh and little scope may be left for the MRJ to gain a foothold, Nishimura said.
“Because the competition for business is tough, Mitsubishi Heavy is not likely to generate good profits even if it joins the market in the future,” Nishimura said.
The regional jet sector is largely dominated by Canada’s Bombardier Inc. and Brazil’s Embraer SA. Chinese and Russian manufacturers are also planning to debut regional jets a few years earlier than the MRJ.
Still, MHI seems determined to proceed.
The project is supported by the Ministry of Economy, Trade and Industry, which has so far requested ¥15.7 billion in the fiscal 2008 budget to cover part of the costs for research and development. The government is expected to subsidize a third of the ¥150 billion project but has not committed to a specific amount.