It has been revealed on the 27th that Toyota Motor has requested Sumitomo Mitsui Banking Corporation and Bank of MUFG Bank to set a commitment line (financing facility) worth a total of 1 trillion yen or $9.2 billion (US Dollars) at current exchange rate.
Currently, Toyota’s financial base is strong, but the company is preparing for a business environment in which uncertainty is growing due to the worldwide spread of the coronavirus. Toyota has about 6 trillion yen ($55.6 billion) in cash.
Moody’s, a major rating agency, lowered Toyota’s financial rating by one level to A1 (equivalent to single A plus) from Aa3 on the 27th, but it is still one of the highest levels among Japanese companies.
However, the rampage of the coronavirus has not stopped, and Toyota has been shutting down factories in Europe and the United States one after another in preparation for the slowdown in the new car market. In Japan, the company has decided to temporarily suspend seven production lines at five plants from April 3. The domestic and foreign financial markets have also been undergoing rough price movements, with the aim of increasing cash on hand.
Sales of automobile manufacturers around the world are rapidly decreasing, and the business environment is deteriorating. General Motors (GM) has withdrawn $16 billion from financial institution’s credit lines to increase cash on hand in preparation for worsening cash flow, as well as cutting employee salaries by 20 percent or more, with approximately 6,500 workers put on leave.