Toyota Extends U.S. Plant Shutdown, Seeks $9 Billion Credit
- Toyota suspends production in 15 plants in the United States
- The Japanese automaker has also halted production in India, Brazil, France and the U.K.
- Toyota is seeking a $9 billion credit from two major Japanese banks
Toyota Motor Corp. (T:7203), the world’s biggest carmaker, has extended the shutdown of its factories in the United States for an additional four weeks. Production in these factories is now scheduled to resume on April 20.
“We will pay Toyota Texas team members through the first three weeks of our one-month closure,” company spokeswoman Luisa Casso said in a statement. “Given the sales impact to the business, we will not be able to extend the pay period for the fourth week of the closure and are asking our team members to use personal time-off.”
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Toyota has 15 factories in the United States, including a major manufacturing facility in San Antonio, Texas, which employs 3,200 workers. It is estimated that Toyota’s suppliers in Texas employ additional 4,000 people.
The closure of plants started on March 18. Toyota has also been forced to suspend production in India after the government ordered a 3-week lockdown. In addition, production sites in France, the U.K., the Philippines and Brazil have also been halted.
“The first two months of the year started off at a healthy sales pace, but the market took a dramatic turn in mid-March as more cities and states began to implement stay-at-home policies due to the coronavirus crisis, and consumers understandably shifted their focus to other things,” said Jessica Caldwell, Edmunds.com’s executive director of insights, who predicts a 35% drop in car sales in March.
Following the economic and financial crisis amid the coronavirus outbreak, Toyota is seeking a 1 trillion yen ($9 billion) line of credit from Sumitomo Mitsui Banking Corp. and MUFG Bank.
“We continually evaluate our funding needs,” Kensuke Ko, a spokesman for Toyota said to Bloomberg. “At this moment nothing has been decided regarding the report.”
Yesterday, Moody’s cut Toyota’s credit rating to A1 from Aa3. The rating firm also downgraded ratings of all global car companies. Toyota is still the best ranked Japanese car manufacturer in the context of credit rating.