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The Kikai, which lays bare the usually hidden mechanical structures of a vehicle, is one of Toyota's future-car concepts.
Business

Japan automakers spending record $25bn on R&D

Even as profits slide, AI, self-driving tech demand active investment

| Japan

NAGOYA, Japan -- Research and development spending by seven major Japanese carmakers is expected to total a record 2.85 trillion yen ($25.5 billion) in fiscal 2017 as they scramble for advantage in such technologies as autonomous driving.

The sum is up 7% from fiscal 2016. Honda Motor, Suzuki Motor, Mazda Motor and Subaru are to spend their most ever. Toyota Motor and Nissan Motor will keep their existing record levels from fiscal 2015. Mitsubishi Motors will increase its outlays by 20%.

The automakers' aggregate operating profit is seen shrinking about 10% from fiscal 2016 to 3.86 trillion yen, due in part to a slowdown in their cash cow market, North America.

Yet the companies are stepping up R&D investment to cultivate green, autonomous driving and other emerging technologies. Outsourcing costs are rising amid labor shortages in Japan.

The auto industry accounted for 22% of around 13.7 trillion yen in fiscal 2015 R&D spending by companies in Japan, according to the Ministry of Internal Affairs and Communications.

Toyota is expected to increase its R&D spending 1% this fiscal year to 1.05 trillion yen. This marks a fourth straight year exceeding 1 trillion yen in spending. The company is boosting spending in key areas like autonomous driving, connected cars, artificial intelligence and robotics.

Toyota is bracing for a second straight year of operating profit decline this fiscal year. Nonetheless, it is spending a hefty sum on R&D to keep up with a rapidly changing competitive landscape. Many information technology and other companies are getting into autonomous driving.

"Rather than giving short-term profit the top priority, we will steadily and continuously invest in the future," President Akio Toyoda said.

With R&D investment imposing a heavy financial burden, each automaker needs to conduct development more efficiently. The key is to capitalize on expertise and talent from other companies.

Honda is co-developing an autonomous driving system with Google-affiliated Waymo. Honda President Takahiro Hachigo says the company focuses on "open innovation," which borrows know-how from other industries.

In 2016, Toyota created an artificial intelligence R&D unit in the U.S., headed by an external expert. The company has also decided to partner with Nvidia, a graphics processing unit maker in the U.S. Both ventures are to speed up technology development.

Overseas rivals are also stepping up R&D spending. Volkswagen spent 13.6 billion euros ($15.2 billion) in 2016, up 0.4% on the year. For the next five years, the German company plans to spend 9 billion euros for electrification technology. In the U.S., General Motors has earmarked $8.1 billion, up 8% on the year.

(Nikkei)

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