TOKYO -- The global economic meltdown is doing more than fueling unprecedented losses at Japans automakers. Its also whacking their cherished r&d budgets.
Reeling from disastrous October-December earnings, Toyota Motor Corp., Mazda Motor Corp., Mitsubishi Motors Corp. and Subaru are all slashing r&d spending.
The cuts come as Japans automakers idle factories and trim jobs to match plunging demand. Of Japans six major automakers, only Honda and Suzuki Motor Corp. say they can deliver a profit, however meager, for the fiscal year ending March 31. The rest are staring at losses.
In this atmosphere, cost cutting is king, and higher r&d expenses are on the chopping block. Theyre saying, Weve got lots of good ideas, but lets wait, says Chris Richter, an auto analyst at CLSA Asia-Pacific Markets.
This year, Mitsubishi will rein in r&d spending by 13.7 percent to ¥67.0 billion ($736.3 million), while Mazda cuts back by 11.7 percent to $1.11 billion. Fuji Heavy Industries Ltd., maker of Subaru brand cars, joins the club with a 7.7 percent decrease to $527.5 million.
Toyota -- whose r&d budget is bigger than Mazdas, Mitsubishis, Subarus and Hondas combined -- is dialing down spending this year by 4.1 percent to $10.11 billion.
The r&d figures include spending on technology and new products. They do not include general capital spending, such as equipping a factory.
Honda is actually increasing r&d spending, although not by as much as originally outlined. Last month, Honda reduced its planned r&d budget by $54.9 million, to $6.54 billion. The new earmark represents a 1.2 percent increase over last year.
In this environment, we cant afford to increase capital outlays by 20 to 30 billion yen every year, Executive Vice President Koichi Kondo said while announcing Hondas earnings on Jan. 30.
Suzuki is the other company pumping money into the product pipeline. The automaker wants to boost r&d spending by 10.4 percent to $1.32 billion. But that, too, is below Suzukis earlier, more optimistic target of $1.43 billion.
Details are scant about what programs are getting the ax. But sports and performance programs seem high on the list. Honda is quitting Formula One, and Mitsubishi is pulling out of the Dakar Rally, which it has won 12 times.
One research area that will likely prevail is the development of green-car technology. With more stringent government guidelines on fuel efficiency and carbon emissions in the United States, Europe and Japan, carmakers have little choice but to invest in improvements.