Big, futuristic investment bets on the post-coronavirus period still feel too early. Yet Toyota Motor Corp. seems to be confident that the dollars will matter.
That stands out in a world where most rivals can barely think about cash flows for the next six months, let alone investments a year from now. While guiding toward an 80 percent drop in operating profits for its 2020 fiscal year, Toyota says it plans to drop capital expenditures by around 3 percent and keep that spending at ¥1.35 trillion ($12.6 billion), while lowering research and development only 1 percent. As a portion of net revenues, R&D would rise to 4.6 percent to about ¥1.35 trillion, up from 3.7 percent, which is the average since 2017.
Toyota is doing what it hasn’t during previous crises that damaged supply chains and businesses around the world. In a speech during last week’s earnings call, President Akio Toyoda recalled the four difficult years after the financial crisis, made worse in 2011 by a devastating earthquake and tsunami in Japan and flooding in Thailand. The company cut costs and investments and grew substantially leaner, but "lost necessary muscle.” Toyoda said that "because we stopped everything to stop the bleeding, including investing in the future, we ended up needing some time to strengthen our company composition.”