Toyota Motor Corp (7203.T) is one of the conspicuous success stories of Japan’s radical efforts to revive its economy, with profits rebounding and its 60,000 workers in Japan hoping this year to receive their first base wage rise in six years.
But when the carmaker reports on Tuesday quarterly profits that are likely to be nearly five times what it booked a year ago, its continued revival will mask a much less optimistic mood among the auto industry’s smaller firms.
For them, the reflationary economic policies of Prime Minister Shinzo Abe, dubbed “Abenomics”, have failed to trickle down beyond the big carmakers, which are actually continuing to squeeze their networks of suppliers.
Pay rises are the last thing on their minds.
“Behind the recovery at the big carmakers is their pressure on suppliers to cut parts prices. It’s been hitting us like a body blow,” said a senior executive of a company that makes drivetrain-related parts for a major Toyota supplier.