Two Factors That Keep Toyota Rolling By Edward Niedermeyer June 15, 2009 Ever since Farago’s fateful appearance on Autoline After Hours, I’ve been hooked on the weekly spectacle of Detroit-think. Talk about a fly on the bunker wall. Anyway, the Vines’s and DeLorenzos of this world never tire of talking about how the recent economic collapse was the sole cause of Detroit’s downfall (not true—see TTAC archives up to last year) and how “everyone is hurting right now.” The first assertion seeks to absolve Detroit of its systemic failures, while the second hopes to show that every automaker has sunk to the depths of, say, GM and Chrysler. Of course the second point is more true (for what it’s worth) than the first, but a few news items show that Toyota is succeeding admirably where GM and Chrysler have abjectly failed. First, Toyota is successfully raising capital. Without going to the capitol. Bloomberg reports that Toyota sold $1.3 billion worth of corporate bonds last week as the firm seeks to solidify its cash position. At a 20-24 basis point premium over Japanese government bonds, the Toyota offering’s terms “were a bit severe, but the market accepted them because it’s strong now,” says corporate bond analyst Hiroshi Harada. And it’s a huge improvement over February when Toyota paid investors as much as 75 basis points more than government debt to sell about $2 billion in bonds. Toyota plans on borrowing as much as $7 billion over the next two years, according to its Japanese disclosure statements. “We want to strengthen our financial foundation by securing our liquidity amid this uncertain operating environment,” say Toyota spokesfolks. And despite Toyota’s drop from Moody’s top credit rating, the automaker has been so successful raising capital on the private market that Honda is eying a billion-dollar bond buy. Second, while Honda contemplates missing its (US) Insight sales goals and GM cancels its Malibu hybrid, Toyota’s Prius plant is paying overtime to keep the lines running at full tilt, reports just-auto [sub]. The Prius has unseated Honda’s Insight as the best selling car in Japan, and it’s ambitious production schedule is pushing Toyota’s suppliers to keep up. Still, Toyota is exercising caution about overseas production expansion, and its Mississippi plant is still not committed to Prius production yet. But for now, the flexibility of Toyota’s Tsutsumi plant is allowing the Prius to be built alongside other models without a special assembly line. Just-auto notes that, at its recent visit to Tsutsumi, “Line one was building North America-bound Prius models the day we visited, along with an occasional Scion tC, also for America, and a few Premio and Arion sedans, essentially high-spec domestic market versions of the Corolla. Line two rolls out domestic-spec and other export market Prius and the odd Japan market Camry while the new EX version of the old Prius for Japan will be squeezed on here soon.” And it’s not just Tsutsumi. One-third of the 50,000 annual Japanese Prius production is built at other plants alongside more prosaic Toyota offerings. The result: a thorough debunking of another Autoline fave fallacy: hybrids are overly complex and unprofitable to build. Just-auto explains, Toyota officials were keen to stress that building hybrids requires no special dedicated assembly line or equipment—the Prius battery pack, with attendant cooling ducting, goes in behind the rear seat like any cabin component, the special orange-coated high-voltage wiring as easily as the main loom and the inverter pack, with coolant circuit, in under the bonnet just like any other engine bay part. The main extra helper we saw was a special lifter to help the operator guide the heavy battery pack on to the rear floor.