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Tech arms race lifts Japan carmakers' R&D budget to record

Fuel cell cars hold great promise as a clean-energy tech.

TOKYO -- Rushing to meet technological needs in the era of tightening environmental regulations, Japanese automakers are set to spend a record sum on research and development this fiscal year.

R&D investment by seven major Japanese carmakers will rise to an all-time-high 2.81 trillion yen ($26.8 billion), according to data compiled by The Nikkei. That would mark a 2.8% uptick from fiscal 2015 and the seventh straight annual increase.

The figure represents a jump of nearly 1 trillion yen from fiscal 2009 -- shortly after the financial crisis. In addition to fuel-efficient vehicles, the automakers are eager to get their hands on autonomous driving technologies. With their budget accounting for a fourth of R&D spending among manufacturers, the auto sector holds significant sway on technological innovation.

Of the seven companies, Toyota Motor, Nissan Motor, Suzuki Motor, Mazda Motor and Fuji Heavy Industries are planning record-high spending.

Toyota's outlays are to increase 2.3% year on year to 1.08 trillion yen, which includes funds for unit Daihatsu Motor and others. That compares with equivalent investment of 800 billion yen to 900 billion yen by such foreign rivals as General Motors of the U.S. and Daimler of Germany.

Toyota has set its sights on both zero-emission fuel cell vehicles and plug-in-hybrids to respond to tighter environmental regulations. Its R&D spending is to surge about 20% from a decade ago, while capital spending is to drop by 10% or so to 1.35 trillion yen. This highlights a sharpening focus on intellectual property.

Nissan's R&D spending will climb 5.3% to 560 billion yen, as the company seeks to develop biofuel-powered fuel cells in order to extend electric vehicles' driving range.

Honda's will decrease by 4.1% because of model development cycles. But the company will open an R&D site in central Tokyo this fall to study the artificial intelligence necessary for self-driving technologies, in collaboration with other research institutes.

Suzuki plans to lift R&D spending 6.9% to 140 billion yen as it seeks to strengthen green offerings in emerging economies. Mazda, with a focus on fuel economy, will increase spending 7.2% to 125 billion yen. Subaru maker Fuji Heavy will ramp up spending 17.2% to 120 billion yen, and Mitsubishi Motors plans a 23.3% jump to 97 billion yen.

While the percentage increases are bigger for these midtier automakers, the gap in investment is widening compared with top automaker Toyota, whose spending had already reached 800 billion yen 10 years ago.

Smaller manufacturers that cannot afford huge spending will likely seek outside business resources, says Carlos Ghosn, CEO of Nissan, predicting a possible industry realignment. Nissan has agreed to take a 34% stake in scandal-mired Mitsubishi Motors.

Capital spending by the seven automakers is seen totaling 3.01 trillion yen for fiscal 2016. This is a 4.5% increase on the year but still 0.6% lower than in fiscal 2006, before the financial crisis hit.


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