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http://www.businessweek.com/globalbiz/content/oct2008/gb20081020_687283.htm?campaign_id=yhoo

After taking over as Toyota (TM) president in June 2005, Katsuaki Watanabe regularly warned of the dangers of complacency creeping in at the Japanese automaker (BusinessWeek, 3/5/07). But until recently, it was a tough message to get across. The company was doing too well: In the year through March 2008, Toyota sold 8.9 million vehicles, an increase of 32% over five years, while its net profits rose 53%, to $17 billion. This year it will likely overtake GM (GM) to become the world's largest carmaker.

These days, though, Watanabe need only point to Toyota's stock price to keep employees' feet on the ground. Since the beginning of the year, Toyota's shares have fallen 37%. While roughly in line with Japan's benchmark stock index, the performance isn't much better than troubled GM, whose stock is down 39%. And Toyota's recent sales, though not nearly as bad the Big Three's, hardly instill confidence. Through September, sales were down 10% in the U.S. and were sluggish in Europe. In Japan, where Toyota's market share is more than 40%, car sales will likely fall short of last year's figures, which was the company's worst in more than two decades. Even in China, where the automaker aims to increase sales 40% this year, the numbers aren't looking as promising as Toyota's top brass had hoped.

Some analysts are sounding the alarm. In an Oct. 10 note to investors, NikkoCitigroup auto analyst Noriyuki Matsushima predicted "a sudden and substantial earnings decline" for Toyota. "We believe Toyota needs to draft a new strategy that changes its existing course and includes initiatives to secure appropriate sales volumes," he wrote. Lowering his projections for the current fiscal year, Matsushima expects Toyota to post operating earnings of $11 billion, a 50% decline compared with the year that ended Mar. 31, and $5 billion less than the company's projection.

Cash Hoard Supports 0% Financing Offer
Time for investors to bail out? Not exactly. Even if Toyota's earnings drop by half this year, the company's operating profits are still likely to exceed $10 billion. And with a solid balance sheet, more than $20 billion in cash, and a slew of new car initiatives, Toyota is better placed than most automakers to weather economic uncertainty. "Once [Toyota executives] have made the decision to do something, they can get on and do it without having to arrange financing," says Andrew Phillips, an analyst at KBC Securities in Tokyo.

For now Toyota's problems seem minor compared with the Big Three's (BusinessWeek.com, 10/7/08)—and it's moving to keep it that way. Toyota's bulging coffers will help it most in the U.S. There, it's using the cash—$3 billion at its U.S. financing unit, as of the end of June—to plug falling sales. Facing an increasingly severe slowdown and growing inventory, Toyota on Oct. 3 began offering for one month interest-free financing on 11 models, including the Corolla, Camry, and Tundra full-size pickup. The risk, say critics, is that 0% financing could undermine car-resale values and hurt the brand if the company decides to extend the offer.

Toyota is also taking radical steps at its North American factories. After opening a plant for big Tundra pickup trucks in San Antonio in 2006, the company has since curtailed production. It also has suspended production at three U.S. plants for three months in August to retool them so there's more emphasis on smaller, fuel-efficient models.

(It's not letting go of the 4,500 workers, though; they're keeping busy by doing everything from training programs to filling in at assembly lines elsewhere or volunteering in local communities.) And for the first time, its hot-selling Prius gas-electric hybrid will be built in the U.S., at a plant in Mississippi—a move that will help it meet a target of selling 1 million hybrids a year early in the next decade.

More Hybrid and Compact Cars
Back in Japan, Toyota is finding ways to trim spending. To counter the rising cost of raw materials, Toyota has begun working with steelmakers to reduce the 4 million metric tons of steel it uses each year. That's led to a 20% reduction in the steel sheets it buys from suppliers, the company says. Toyota has also asked group companies and suppliers to submit ideas for lowering costs.

Perhaps more important, though, is Toyota's pipeline of new vehicles, which will incorporate more hybrid models. A new Prius next year will likely be shown at the North American International Auto Show in Detroit in January, and two more hybrid models, along with hybrids for the luxury Lexus lineup, could be available by 2010. "There's no magic formula to cope with the sudden changes in the business environment," says Tatsuo Yoshida, an analyst at UBS (UBS) in Tokyo. "But Toyota has one of the widest product portfolios, and it invested heavily in hybrids as well."
 

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Back in Japan, Toyota is finding ways to trim spending. To counter the rising cost of raw materials, Toyota has begun working with steelmakers to reduce the 4 million metric tons of steel it uses each year. That's led to a 20% reduction in the steel sheets it buys from suppliers, the company says. Toyota has also asked group companies and suppliers to submit ideas for lowering costs.

HUH? OK. How does that work??
Do the cars use less steel?

Overall, how does that help the economy? OK, so Toyota saves money by not buying steel. But the steel companies lose out in revenue. Hmmmm

It is interesting seeing the 2 different ways Toyota and GM handle this. Toyota's cash does offer them some flexibility in the matter though.

Still, it seems like Toyota is going to cut costs and innovate its way through this mess. GM seems to be trying to do the same things, but to a lesser degree of success.

Still.... TOyota has much further to fall than GM.
 

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I wish GM was as well placed and funded (profitable) as TOYO.

Hopefully sooner rather that later...after GM swallows CHRYSLER and sends all the crappy products to the shredder!
 

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toyoda.....arn't they great??? they dont lay-off workers, they help out the community instead, that makes me feel all warm and rosey inside. so much so that i think i'll go out and buy a toyoda. that way the big bad GM can lay-off workers instead.
 

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All said and done, this is a pretty well managed and efficient company.
Right. The current economic times accentuate the differences in long-term business strategies between GM and Toyota. I wish GM would be in Toyota's place; while Toyota's seeing some hard times, it's still turning in 11-figure profits, it's still sitting on a mountain of cash, it's market cap still dwarfs almost everyone else's market cap.

...Hopefully sooner rather that later...after GM swallows CHRYSLER and sends all the crappy products to the shredder!
GM and the rest of the market need the market itself to determine what companies, which products, and which dealerships should stay or go. It benefits GM very little to buy a company (that it cannot afford) and sift through what works and what doesn't, especially when GM has already demonstrated it cannot achieve that with what it already has. Purchasing Chrysler would be an enormous distraction that GM can ill afford.

Eyes on the prize, GM.
 

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Oh come on, every number in this article is either missing or obsolete - which I suppose is why it was written that way.

For the last couple of days Toyota stock prices have been in the -45/46% range on a 52 week period basis.

A number not reported is that peak values occurred in Jan 2007 and todays prices represent a -51% departure from there.

Current sources are now estimating this years profit losses at - 47% and those same sources are now showing future expected performance below all previous forecasts.

Toyota refuses to comment at this time.

And on and on it goes - everything has an optimistic overstatement to it.

But of course this advertorial leaves out the most important observation concerning the future - the highly likely - indeed, inevitable currency realightments that will be happening - probably fairly soon.

That is going to without a doubt partially level the playing field and play havoc with their numbers.

There is of course, more.
 

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Oh come on, every number in this article is either missing or obsolete - which I suppose is why it was written that way.

For the last couple of days Toyota stock prices have been in the -45/46% range on a 52 week period basis.

A number not reported is that peak values occurred in Jan 2007 and todays prices represent a -51% departure from there.

Current sources are now estimating this years profit losses at - 47% and those same sources are now showing future expected performance below all previous forecasts.

Toyota refuses to comment at this time.

And on and on it goes - everything has an optimistic overstatement to it.

But of course this advertorial leaves out the most important observation concerning the future - the highly likely - indeed, inevitable currency realightments that will be happening - probably fairly soon.

That is going to without a doubt partially level the playing field and play havoc with their numbers.

There is of course, more.
Do you honestly believe that Toyota's fate is similar to many other automakers' fates? I don't necessarily take the above article to be brushing over Toyota's challenges, though I do agree that they are much better positioned than many automakers-including all three from Detroit-to weather the next year or two. I'd say BMW and Honda are in Toyota's company, but I would hardly believe that most automakers are either going into the global downturn in similar positions or that they will emerge-if they emerge-in a similar position as Toyota.

Put another way, Toyota's experiencing angina, Detroit's having a full-blown M.I. with heart failure and a nice case of atrial fibrillation with clots being thrown to the brain for good measure. Which patient would you put your money on?
 

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toyoda.....arn't they great??? they dont lay-off workers, they help out the community instead, that makes me feel all warm and rosey inside. so much so that i think i'll go out and buy a toyoda. that way the big bad GM can lay-off workers instead.
GM has done that many years ago and it cost GM a ton of money. Toyota is about 15-20 years behind everything GM or Ford has done.
 

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That article reads so much like the ones I saw in the 80s concerning GM, when it was awash in cash. It all reads like "Toyota first, suppliers be damned" type of stuff.

And I love that they throw in the "hybrid" comment all the time, as if most of Toyota's revenue comes from them resulting in the inexplicable collapse of sales in North America of late.
 

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GM has done that many years ago and it cost GM a ton of money. Toyota is about 15-20 years behind everything GM or Ford has done.
Finally some good news...

That means that Toyota is about to promote some "also ran" operational manager to the position of CFO... He will have no financial background or accounting designation...

He will begin by bleeding the most popular division dry of product and begin all kinds of odd ball mergers and acquisitions... Then in about 5-8 years they will make him the CEO, he will immediately announce the closure of Toyota's oldest division and lose every customer of that division in the process.

He will then hire the biggest and best "car guy" on the planet and they will begin to create product overlap and marketing chaos on a level not seen since the introduction of "new Coke". They will cancel the Prius only to bring it back 8 years later... They will rename the Corolla the C1, the Camry the C2, the 4runner the C4R, and the Avalon is called the C8, they will cancel ALL new product and engine development at Lexus and tell everyone to buy an ES since it is car of the year and competes in someway with a BMW 3, 5, 6, and 7 series

The share price will plummet from ~$90 to $6.50. All the while the board of directors say "He's our man"...

In the dying days they will ask the Japanese government for loan guarantees (no to be confused with a bailout) when they can't raise any capital any more and eventually the Japanese government will start to quietly buy up Toyota stock (that is the actual bailout) with the hopes of propping up this once huge company...

Then, with their last breath they will announce a merger with Nissan. Where Nissan gets all of Toyota's bad debt and Toyota gets more cars and brands that they have no idea what to do with...

Wow, when you put it that way, if you are right the next 15-20 years will be dark ones for Toyota.
 

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toyoda.....arn't they great??? they dont lay-off workers, they help out the community instead, that makes me feel all warm and rosey inside. so much so that i think i'll go out and buy a toyoda. that way the big bad GM can lay-off workers instead.
Well yea cause Toyota employs very few Americans comparatively speaking. They set a company record for the number of imports into the North American market in 2006. 1.5 million imported vehicles or 46% of their total annual North American sales.

They for the most part stay out of America as foreign labor, and general overhead is typically much cheaper anywhere but the US.

So it's not a shock when GM who's heavily invested in US labor and overhead lays off people when times are tough. If the import manufacturers had the same employee quantity footprint they would not be immune to layoffs.
 

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Finally some good news...

That means that Toyota is about to promote some "also ran" operational manager to the position of CFO... He will have no financial background or accounting designation...

He will begin by bleeding the most popular division dry of product and begin all kinds of odd ball mergers and acquisitions... Then in about 5-8 years they will make him the CEO, he will immediately announce the closure of Toyota's oldest division and lose every customer of that division in the process.

He will then hire the biggest and best "car guy" on the planet and they will begin to create product overlap and marketing chaos on a level not seen since the introduction of "new Coke". They will cancel the Prius only to bring it back 8 years later... They will rename the Corolla the C1, the Camry the C2, the 4runner the C4R, and the Avalon is called the C8, they will cancel ALL new product and engine development at Lexus and tell everyone to buy an ES since it is car of the year and competes in someway with a BMW 3, 5, 6, and 7 series

The share price will plummet from ~$90 to $6.50. All the while the board of directors say "He's our man"...

In the dying days they will ask the Japanese government for loan guarantees (no to be confused with a bailout) when they can't raise any capital any more and eventually the Japanese government will start to quietly buy up Toyota stock (that is the actual bailout) with the hopes of propping up this once huge company...

Then, with their last breath they will announce a merger with Nissan. Where Nissan gets all of Toyota's bad debt and Toyota gets more cars and brands that they have no idea what to do with...

Wow, when you put it that way, if you are right the next 15-20 years will be dark ones for Toyota.
WOW!!.................A sad GM story indeed wrapped up in one post.
 

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Toyota just like GM has been making their bucks on big SUVs and Trucks, the bottom fell out of the market and wham, they are experiencing the same thing as the rest of the industry. Their new [email protected] is not going to be the life raft this writer thinks, in fact Toyota had been selling the car at zero to low profit. What will help Toyota is the Japanese governments determination to see Toyota rule the automobile world, they will fund any cost to keep it moving in that direction.

As to Toyota workers doing community work, that's to keep the unions at bay, nothing more, nothing less. Toyota could care less about their workers or their community, all they care about is duping the naive American public with their appliances on wheels.
 

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Do you honestly believe that Toyota's fate is similar to many other automakers' fates? I don't necessarily take the above article to be brushing over Toyota's challenges, though I do agree that they are much better positioned than many automakers-including all three from Detroit-to weather the next year or two. I'd say BMW and Honda are in Toyota's company, but I would hardly believe that most automakers are either going into the global downturn in similar positions or that they will emerge-if they emerge-in a similar position as Toyota.
Several auto companies have used crisis to restructure themselves and came back strong. General Motors almost became insolvent in 1920 and was bailed out by the DuPonts. Pierre DuPont became Chairman and put the organizational structure in place that led to General Motors' success. BMW struggled after WWII. The introduction of the 1500 marked the start of their turnaround in 1961. Nissan was heading for bankruptcy until the Renault alliance in 2000 started their turnaround. General Motors and Ford appear to be addressing their problems. The current economic climate is making their turnarounds much harder. Also, their labor agreements make restructuring much more difficult. Time will tell if they can do it.
 

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Finally some good news...

That means that Toyota is about to promote some "also ran" operational manager to the position of CFO... He will have no financial background or accounting designation...

He will begin by bleeding the most popular division dry of product and begin all kinds of odd ball mergers and acquisitions... Then in about 5-8 years they will make him the CEO, he will immediately announce the closure of Toyota's oldest division and lose every customer of that division in the process.

He will then hire the biggest and best "car guy" on the planet and they will begin to create product overlap and marketing chaos on a level not seen since the introduction of "new Coke". They will cancel the Prius only to bring it back 8 years later... They will rename the Corolla the C1, the Camry the C2, the 4runner the C4R, and the Avalon is called the C8, they will cancel ALL new product and engine development at Lexus and tell everyone to buy an ES since it is car of the year and competes in someway with a BMW 3, 5, 6, and 7 series

The share price will plummet from ~$90 to $6.50. All the while the board of directors say "He's our man"...

In the dying days they will ask the Japanese government for loan guarantees (no to be confused with a bailout) when they can't raise any capital any more and eventually the Japanese government will start to quietly buy up Toyota stock (that is the actual bailout) with the hopes of propping up this once huge company...

Then, with their last breath they will announce a merger with Nissan. Where Nissan gets all of Toyota's bad debt and Toyota gets more cars and brands that they have no idea what to do with...

Wow, when you put it that way, if you are right the next 15-20 years will be dark ones for Toyota.
Hysterical but highly inaccurate.
 

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Finally some good news...

That means that Toyota is about to promote some "also ran" operational manager to the position of CFO... He will have no financial background or accounting designation...

He will begin by bleeding the most popular division dry of product and begin all kinds of odd ball mergers and acquisitions... Then in about 5-8 years they will make him the CEO, he will immediately announce the closure of Toyota's oldest division and lose every customer of that division in the process.

He will then hire the biggest and best "car guy" on the planet and they will begin to create product overlap and marketing chaos on a level not seen since the introduction of "new Coke". They will cancel the Prius only to bring it back 8 years later... They will rename the Corolla the C1, the Camry the C2, the 4runner the C4R, and the Avalon is called the C8, they will cancel ALL new product and engine development at Lexus and tell everyone to buy an ES since it is car of the year and competes in someway with a BMW 3, 5, 6, and 7 series

The share price will plummet from ~$90 to $6.50. All the while the board of directors say "He's our man"...

In the dying days they will ask the Japanese government for loan guarantees (no to be confused with a bailout) when they can't raise any capital any more and eventually the Japanese government will start to quietly buy up Toyota stock (that is the actual bailout) with the hopes of propping up this once huge company...

Then, with their last breath they will announce a merger with Nissan. Where Nissan gets all of Toyota's bad debt and Toyota gets more cars and brands that they have no idea what to do with...

Wow, when you put it that way, if you are right the next 15-20 years will be dark ones for Toyota.
I nominate this one for POST OF THE YEAR! FANTASTIC!
 

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That article reads so much like the ones I saw in the 80s concerning GM, when it was awash in cash. It all reads like "Toyota first, suppliers be damned" type of stuff.

And I love that they throw in the "hybrid" comment all the time, as if most of Toyota's revenue comes from them resulting in the inexplicable collapse of sales in North America of late.

Accuracy. Always accuracy first.

9 mo YTD sales -10%

But the more recent decline is very expicable.
  • Fuel prices in the first 9 mo's reached record highs
  • Being a BOF vehicle maker sucks. All BOF vehicle makers are down 20-30% in sales over last year.
  • Then there's the very real 'intentional decline' in sales from vehicles made in Japan. This isn't discussed much but you can see it right here at GMI with the Astra.

With the decline in the value of the US$ through July there is no incentive at all to import vehicles from Europe or Japan to the US. Canada is far more attractive, China is even more attractive. But considering Toyota only for the moment the hottest vehicle in the automotive world for the first 9 months of this year was the Prius. Waiting lists extended 9-12 months at one point and yet they decided NOT to fill that demand. As a matter of fact they even reduced the number of units imported here in the face of white-hot demand. Why would they take units away from their largest and most influential market? Because the value of the sales here in US$ made the vehicles less attractive than say in China or Japan or SE Asia or Europe.

All the high volume vehicles made in Japan are down significantly and it's mostly due to the weakened US$ vs JY. The key vehicles in decline are the ES, LS models, Prius, RAV, 4Runner, and Scions. This is a rational business plan in the face of declining currency values.

I know, I used to do it in another industry during the 80s and 90s. If the currency in one market went into the tank that country got little or no product to sell. When the currency recovered that country got all it wanted.
 
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