Toyota Chief Might Cut Spending to Compensate for Profit Slide

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The auto giant Toyota is in for a second straight annual decline in profit and Akio Toyoda, the President of the company has hinted that he might have to cut the spending. It is expected that the operating profit of the company will fall by 20 percent coming to 1.6 trillion yen in the fiscal year through March.

Toyoda said, “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. We need to make the decision to look at where to stop when sales are stagnating.”

This will be the first back-to-back profit decline for the largest automaker of Japan since 1994. The company had lastly posted a loss in 2009 when the entire global economy was in shambles after the financial crisis and Toyota said the trouble that the stakeholders went in then rubbed on his soul. He has then pledged to insulate Toyota from the boom-and-bust cycles that are prevalent in the auto industry and thus this time around he considers the two straight losses as his personal setback.

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Toyoda said that the problem with the automaker comes because of its size and history. He has created in-house companies last year so that the decision-making can be sped up and the company becomes much more responsive to the changes happening in the industry. In spite of these steps, it looks like the changes will take some time to show results.

Now the company plans to increase its production capabilities overseas, but on the home front it is focusing on automation of the processes rather than increasing the capacity. Toyota plans to increase the efficiency by cutting the production costs per car.