Toyota Asks for Supplier Discount

Toyota Motor (TM - Analyst Report) has urged its suppliers to allow a 30% discount on their prices for many components by the time it rolls out new models for 2013. The company also reorganized its procurement functions, merging three purchasing divisions into two in order to save costs. The move was part of a broader streamlining of management lines as ordered by Akio Toyoda, Chief Executive Officer of the company. 

Toyota has intensified its cost-saving efforts this year due to the global economic slump. Last month, the company decided to cut winter bonus payments for its managers and union workers in Japan. The company has announced that it will slash bonus payments for 8,700 managers in Japan by 20% and for union workers by 18% on a year-over-year basis.
 
Toyota returned to profitability in the second quarter of fiscal 2010 ended Sep 30, 2009, after reporting losses since the third quarter of fiscal 2009. The company posted a profit of ¥21.8 billion ($232 million) or ¥6.96 (7 cents) per share. 

This was attributable to government incentive programs across the world – such as the U.S. “Cash for Clunkers” – that helped the company recoup its market share. Toyota revised its consolidated vehicle sales for the fiscal ending Mar 31, 2010 from 6.6 million to 7.03 million units, an increase of 430,000 units. This figure reflects the increase in sales due to the success of various incentive programs launched by governments across the world to stimulate demand in the industry as well as sales of the company’s own hybrids and other environment-friendly vehicles.
 
Consequently, the consolidated net revenue forecast was upgraded to ¥18 trillion ($191 billion). However, the company anticipates an operating loss of ¥350 billion ($3.72 billion) and a net loss of ¥200 billion ($2.13 billion) for fiscal 2010.

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