Toyota forms cost-saving task force to arrest profit slide

TOKYO -- Toyota Motor Corp. has created a task force comprising senior executives to oversee costs as Japan’s biggest automaker seeks to arrest a slide in operating profit.

The carmaker’s four executive vice presidents -- Osamu Nagata, who is also chief financial officer, Mitsuru Kawai, Shigeki Terashi, and Didier Leroy -- will be responsible for ensuring any funds for new proposals will be met by cutting spending on existing projects, according to a copy of a union newsletter dated June 2 obtained by Bloomberg News.

Toyota President Akio Toyoda said last month at the company’s earnings results briefing that the automaker will take a closer look at its investments after forecasting a second straight annual decline in operating profit. The company sees the risks of a further slide in operating profit beyond this fiscal year as it forecasts stagnant sales, according to the newsletter.

Like its peers, Toyota faces investments in self-driving and connected technology, and is now developing electric vehicles after focusing largely on fuel cells in the past several years.

The Japanese automaker has identified costs such as upgrading factories to Toyota’s new global architecture, or TNGA, and increasing the number of vehicles using the platform, as well as spending toward meeting stricter environmental regulations and on other new technologies, according to the newsletter.

The meeting between company management and labor union leaders took place last month, according to the newsletter. A representative for Toyota declined to comment.

Shares of Toyota have declined 15 percent this year, compared with the 4.7 percent gain in the Nikkei 225 Stock Average.

The automaker last month forecast a drop in annual operating profit on expectations for a stronger yen and as sales slow in the U.S., its biggest market. That would be the first time since 1994 that profit declined for two consecutive years.

Spending on r&d will probably rise about 1 percent to 1.05 trillion yen ($9.5 billion) while capital expenditure will increase 7.3 percent to 1.3 trillion yen in the financial year ending March 31, 2018, Toyota said on May 10.