Even Toyota can't escape the recession - Top Stocks Blog - MSN Money
 
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Even Toyota can't escape the recession

Posted Dec 22 2008, 05:08 PM by Kim Peterson
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Detroit's Big Three deserve the criticisms they're getting about mismanagement and bad planning, but even well-run automakers are getting hit in the recession.

Toyota showed that it's just as vulnerable as other car companies Monday when it said it would have its first operating loss in 70 years. For its fiscal year, which ends March 31, the company is facing a $1.7 billion loss -- its first since 1938.

That's a long drop from the $25 billion in operating profit the year before. But Toyota has a powerful weapon to get through this crisis: an $18 billion cash hoard with little debt. Shares fell just 6% on the news today to close at $60.36.

The huge drop in auto sales, particularly in the U.S., has hurt Toyota, which does a third of its business here. A strong yen was also hurting profits.

"The tough times are hitting us far faster, wider and deeper than expected," Toyota's president said. "This is an unprecedented crisis requiring urgent action."

The urgent action, for Toyota, means freezing plans to expand plants in Mississippi and other parts of the world. Toyota also lowered its sales forecast.

In some ways, the bad news is just beginning. Analysts don't think people will start buying cars again until late 2009, which means that Toyota and other automakers will have to take more drastic action to stay in business. It would be a shame to see Toyota burn through that carefully nurtured mountain of cash to get through the next couple of years.

“It is just a matter of time before all major automakers are losing money,” an auto analyst told the New York Times. “And things will just get worse next year, when companies start losing money for the second consecutive year.”

Look for Toyota's stock price to suffer as well, after managing to stay in the $60 to $70 range for the last three months. The stock started out this year above $105.

Related reading:

Auto sales crash and burn

Americans own too many cars

Markets crash on auto blowout

Do auto workers really earn $73 an hour?

Comments

 

I had a 4runner for 16 years, I sold it and it was almost in perfect condition after all those years of use. I gave it the maintenace required by the manufacturer and a little more like sintetic oil on the engine. I think that they put pride in there cars and that is what the US automakers lack. That is why toyota is doing well and that is why they will become #1 automaker soon if not already.

I find it hard to believe that Toyota has not had a loosing year since 1938.  Didn't the USA literaly destroy Japans economy during the second world war?  I doubt they were making cars in 1944-45.  That said, I have owned several Toyota's and got more milage out of them than any American car I ever owned.  My biggest lemon was a Ford Mustang,,,, it looked pretty but couldn't keep it running.

It's funny how people want to put down American built cars. I happen to own 3 gm cars. Every one of them are 12 to 16 years old. All of them are daily drivers and all of them are in great condition. All 3 are driven city miles and we all know that is the hardest on cars. All have original engines and transmissions and have required olny normal maintenance. US automakers don't lack pride in what they build. I just think alot of America have lost pride in their county.

Just bought my wife a '09 Mustang... $2000 below invoice price.. I am born / raised FORD... My '02 Explorer is running great... Love it.

Buy American by Americans....Some day OUR automakers will become completely OUR automakers... Time for AMERICA to think of AMERICA.. not just how we look in the international forum. As Alice Cooper sang years ago.. "NO MORE, MR NICE GUY"....

Gee, hard times for Toyota too? But they have a cash reserve. I guess if you actually sell a car or two in 40+ mpg arena to go along with your trucks and you don't pay executives millions or indulge in management and labor stupidity it is possible to get a cash reserve up!

I can understand why GMC and Chyrsler are loosers. Neither one of them can design an auto that really appeals to world masses. Ford being a more international brand forth right and outwardly, seems to have a handle on design and repairs and maintanence issues and the associated costs to the owners of their vehicles.

You see this same business model extensively with most all successful brands of automobiles  that Detroit can't seem to replicate... or cares to impliment in their products and their own business model. Ford may be the only folks in the USA Auto industry close to figuring the market out...duh!!!

I had the experience this last week of renting a Mitsubishi Gallant, a Ford Fusion, and a Cheverlot Aveo... no wonder Chevy's loosing money! That piece of junk Aveo isn't worth the time or materials to build.The design is no design. I saw better designs in the 60's and 70's. That model is a huge waste on GM's part. Who the bloody hell in their right mind would even think they were getting a great car of that GM product? Listen up GMC: If that Aveo was all I could afford new (or used for that matter) I think I'd wait that little bit longer to save the needed difference to afford the next model up... a real car. That auto is being pawned off to consumers. The Mitsu was as all other asian vehicles. Amongst the Nissans and Hondas and Toyotas of the world, it pleases and appeals. But I must admit of the three rentals The Ford Fusion was a hit! It appealed to all my consumer senses that I bought one this weekend. AMERICAN AUTO WORKERS AND EXECUTIVES...LISTEN UP ... QUIT BEING STUPID WITH YOUR LIVELIHOODS...OR GO OUT OF BUSINESS AND LEAVE THE AMERICAN TAXPAYER ALONE... MORE IMPORTANT THINGS TO WORRY ABOUT THAN YOUR CRAPPY BUSINESS SENSE.

I like the Fusion.. but the wifely one didn't like it.. so we ended up with the Mustang. About same price.. went home to Dallas to get a good deal.

It's a shame American car makers with the union have come to this point. Henry Ford must be rolling over in his grave..

At least Toyota is not asking for a bailout appraently their executives are more responsible.  I am on my second Toyota. My first was totaled in an accident ( not my fault) otherwise I would still have it.  In my lifetime I have owned 1 Chev and 2 Fords that were crap and  I also owned a Mazda and a Subaru that were pretty good.  I take good care of my cars and at this rate I will never purchase another american car again.

Have to throw the bullsh*t flag on the claim of superiority of FOREIGN cars.. I had a '77 Ford van till I finally traded it in '04... had many older Fords that I drove for years and years and miles and miles.. would drive them to the ground.. rebuild / overhaul and drive them more.

Yeah.. the Yapanese make cute little plastic cars... I only accept Toyota because NASCAR lets them race..

I will think of american automakers/workers when they think about me. When those incredible extravagant wages and bennies were being negotiated with the car companies how much thought do you think the UAW and its members gave to the american consumer? Try none. They stuck it to us so they could live far above their skill and intellect levels and that is what I will give the automakers and their fat cat unions. I've not bought a new american car since 1976 but unfortunately had to drive american cars as company vehicles right up through 2003. They were still junk in 2003, years behind the Japanese in style, comfort and most of all stamina. My wife always had Japanese cars, Honda, Toyota, Mazda. All were better than comparable american vehicles except the Mazda which had some US attributes. The Hondas and the Toyotas are just simply better than the us competition and its easy to figure why. When it costs you 30 or 40 dollars per hour more to build a car than your competitor some thing has to give. Its simple economics and the money that should go into a vehicle instead goes into benefits, etc. well your car is not going to be as good as the one your competitor with less cost is going to build. Really simple isn't it?

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