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Toyota to raise R&D, capital spending to meet future demand

Toyota Motor Corp. plans to boost its research and development and capital spending to ¥2.45 trillion in fiscal year 2019 to address the shift toward new-generation technology in the industry.

Of the total, ¥1.080 trillion will be earmarked for R&D while ¥1.370 trillion is expected to be used for capital expenditures on a consolidated GAAP basis. The automaker said it expects to spend around 35% of the allocated R&D budget on new technology development or in new-generation businesses.

In comparison, the company booked ¥1.064 trillion in R&D expenses and ¥1.303 trillion in capital expenditures for the fiscal year 2018.

Koji Kobayashi, Toyota's executive vice president, acknowledged the need to improve efficiency in R&D as the company's current investments for technology, including connectivity, "are not really generating earnings." By collaborating within Toyota's businesses and partners from other areas in certain cases, the company plans to continue R&D to develop vehicles that can "really satisfy" its customers, Kobayashi added, in response to a question on an earnings call regarding the company's R&D strategy in comparison with new rivals such as Amazon.com Inc.

Toyota posted a 36.2% jump year over year in net earnings for the fiscal year 2018, boosted by higher revenues in most regions. The company expects net income to shrink by 15.0% on an annual basis in the fiscal year 2019.

As of May 9, US$1 was equivalent to ¥109.74.