Toyota Supplier to Boost Capital Spending on New Vehicle Models

Toyoda Gosei Co. (7282), a supplier to Toyota Motor Corp. (7203), plans to increase capital spending next fiscal year as carmakers roll out new models.

Capital expenditure will “definitely grow” in the year ending March 2015, Tadashi Arashima, president of the maker of auto parts including steering wheels and air bags, said in an interview yesterday at the company’s headquarters in Kiyosu, Japan. The company plans to invest in countries including Brazil, where it opened a new factory last year, and in Indonesia.

Toyoda Gosei expects capital spending to grow 12 percent to 43.5 billion yen ($418 million) in the 12 months ending March 2014. The parts maker, 43 percent owned by Toyota, estimates net income will grow 17 percent to 25 billion yen as it benefits from a weaker yen, which is making Japanese vehicles more competitive overseas.

The company is increasing spending as carmakers predict a gradual increase in European demand, U.S. auto sales had their best year since 2007 and China became the first country to surpass 20 million units in deliveries a year. Aisin Seiki Co., an auto-parts maker that counts Toyota as its biggest customer, said this month it’s considering acquiring or collaborating with electronic component makers to develop parts.

Toyoda Gosei is facing a capacity shortage in North America because of a “quicker-than-expected recovery,” Arashima said. The parts maker plans to gradually add production capacity in the region, he said.

The company’s shares have declined 7.6 percent this year, compared with the 4 percent drop in the Nikkei 225 Stock Average.

To contact the reporter on this story: Anna Mukai in Tokyo at amukai1@bloomberg.net

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

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