Toyota Motor Corp. President Akio Toyoda, whose company has accumulated a cash pile of almost $40 billion, is facing calls to put that money to better use.
The world’s largest carmaker is seeing profits surge as the yen weakens and demand rises in the U.S. and China. The company will probably report today net income quadrupled to 434.3 billion yen ($4.3 billion) last quarter, according to the average analyst estimate compiled by Bloomberg, adding to the 3.88 trillion yen in cash and short-term investments it had at the end of September.
“They have to make a decision very quickly,” Edwin Merner, president of Atlantis Investment Research Corp. in Tokyo, said in reference to Toyota’s capacity in China. “If they don’t do it, they’ll lose market share. They can’t lose more market share.”
One risk of doing so is that like other Japanese carmakers, Toyota is vulnerable to geopolitical tensions, as illustrated by Japanese Prime Minister Shinzo Abe’s recent visit to the Yasukuni Shrine, which includes World War II soldiers convicted of Class-A war crimes. In 2012, consumers shunned Japanese products because of a dispute over a group of uninhabited islands, sending Toyota sales down by 4.9 percent, while companies from General Motors Co. to Hyundai Motor Co. increased their deliveries.