Toyota Bonus Is Highest Since ’08 as Yen Drop Spurs Rebound

Toyota Motor Corp (7203). approved the biggest salary bonus in five years as a weakening yen boosts the value of exports, helping the world’s largest automaker project the highest profit since 2008.

Toyota (7203) agreed to a union proposal for a 2013 average bonus of about 2.05 million yen ($21,375), compared with 1.77 million yen in 2012, the company said today. The automaker paid a 2.51 million yen bonus in 2008, according to the Japan Automobile Workers’ Union.

The carmaker’s bonus increase follows similar boosts by its rival Honda Motor Co. (7267) and electronics group Hitachi Ltd. (6501), adding to signs the nation’s manufacturers have recovered after earthquakes and a tsunami in Japan and floods in Thailand disrupted output in 2011 and 2012. A 17 percent drop in the yen since Oct. 31, fueled by Prime Minister Shinzo Abe’s pledge of “unlimited” stimulus, has also helped manufacturers by boosting the value of exports.

“We can expect more companies to raise bonuses if the yen weakens further,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management Co. “If this trend keeps going, the Japanese economy as a whole will improve.”

More than a decade of deflation and sluggish economic growth have cemented expectations for stagnant wage growth and undermined consumer confidence. Average monthly pay in 2012 was 297,800 yen, 8.2 percent higher than in 1992.

Deflation War

Japanese companies traditionally set twice-a-year bonuses as a multiple of monthly salary, and the money is treated as guaranteed pay, not incentive compensation. The amounts are typically adjusted annually in negotiations with labor unions.

Abe, elected after vowing to end deflation, has also called on companies whose businesses have improved to raise wages to help achieve a 2 percent inflation target.

Consumer prices in Japan, excluding fresh food, fell 0.2 percent in January. The price gauge hasn’t advanced 2 percent -- the central bank’s target since January -- for any year since 1997, when a national sales tax was increased.

Toyota (7203) fell 1 percent to 4,910 yen as of the close in Tokyo trading, paring its gain this year to 23 percent. The Nikkei 225 Stock Average fell 0.6 percent today and is up 18 percent in 2013.

The Toyota City, Japan-based automaker outsold General Motors Co (GM). and Volkswagen AG (VOW) globally last year, regaining the industry sales lead after ceding it to GM in 2011.

Toyota last month raised it full-year net income forecast by 10 percent to 860 billion yen, more than triple 2012 profit and the highest since the year ended March 2008.

Nissan Motor Co. (7201) also increased its annual bonus for 2013, the automaker said today.

To contact the reporters on this story: Ma Jie in Tokyo at jma124@bloomberg.net; Masatsugu Horie in Osaka at mhorie3@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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