Toyota Motor Corp. has a $1.3 trillion debt, but the automaker expects to make $1 billion in payments on it over the next few years.
That would put its long-term financing plans into a more favorable territory than the other auto companies, which have had trouble meeting their debt obligations.
That’s because the company has taken a more aggressive approach to financing, and its current debt is not as bad as many analysts have predicted.
Toyota’s current debt of $3.1 billion is nearly half the $12.8 billion in cash it owes.
The automaker has borrowed $4.5 billion in the past year and a half, according to data from Moody’s Investors Service.
Toyota says its financial strength will be reflected in the company’s profit in the next year.
Toyota has a very aggressive balance sheet and a much better leverage ratio than other companies in the industry, including Volkswagen AG.
In the past five years, the company says it has been able to reduce debt by about $2 billion, or 10%.
That’s partly because it has taken less on interest payments and partly because the balance sheet has been diversified, reducing its debt from about $16 billion in 2015 to about $11 billion in 2020.
Toyota also is in a better position than the rest of the industry to make long-range debt payments.
The Japanese automaker plans to pay about $1,000 per car in 2019, up from $950.
The company says its credit rating will stay solid for years to come, as it continues to invest in technology.
Toyota plans to spend about $4 billion on the next five years on capital expenditures, including on research and development and product design.
That money should pay for the cost of developing a fully autonomous car, Toyota says.
Toyota is also spending more on research to help develop autonomous driving technology.
It’s already developed technology that helps a driver steer a car in the dark, in addition to sensors that help it recognize obstacles and respond to road signs.
The technology is already used in some cars that are fully autonomous, and it could help Toyota become a leader in the autonomous-vehicle market.
It is expected to make a profit of $1 to $2 per share this year, depending on the economic outlook.
Read more at National Review.com