The weakening European situation definitely should be of worry to TM, but one must understand that European sales only represent about a fifth of TM's total sales. In fact, excluding European and North American operations, TM derives over 50% of its sales from other regions, which has been less impacted by TM's woes. The current price as dictated by TM is unfair because it takes into consideration too heavily the impact of the Euro plight, even after considering TM's recall issues. Therefore, TM should command a higher value.
In conjunction with growth, Toyota’s high profit level is particularly exciting. Growth normally signals a downturn in profits as prices fall to accommodate business expansion.They have become great not by making giant leaps but by continous, steady improvement over a long period of time. Day to day it might not seem like much progress. But over a long period of time their growth and increased powers have become apparent. Plus, this was a great extract on TM --
The answer has a lot to do with another distinctive element of Toyota’s approach: defining innovation as an incremental process, in which the goal is not to make huge, sudden leaps but, rather, to make things better on a daily basis. (The principle is often known by its Japanese name, kaizen—continuous improvement.) Instead of trying to throw long touchdown passes, as it were, Toyota moves down the field by means of short and steady gains..... Cumulatively, every day, Toyota knows a little more, and does things a little better, than it did the day before.
- “The Open Secret of Success” , James Surowiecki, The New Yorker, May 12, 2008
Toyota's profit for the fourth quarter in 2007 jumped 7.5% from the previous year as booming sales in emerging markets such as China, Africa and South America offset declining US sales and about a 20 Billion Yen loss due to an unfavorable exchange rate. The robust sales are expected to continue with increasing demand for its hybrid cars and smaller models due to soaring oil prices .
As GM does, so do other automakers such as Germany’s Opel and Japan’s Toyota. Whereas German Chancelor Angela Merkel hasn’t pledged any relief for her country’s car companies yet, citing the need for more information before she will or won’t, Japan has all but directly promised Toyota what it wants.
That comes as no surprise considering Japan’s history of “rescuing” its economy, as evidenced by its Lost Decade. It has already shown a willingness to meddle in the free markets in the past twenty years, and with the rest of the world shoring itself up with various bailouts and infusions, Japan is sure to jump on the same bandwagon with equal enthusiasm.
In their defense, they have good reason for wanting to. The Japanese economy is hurting, putting stress on the Japanese people and therefore stress on the Japanese government as well. With demand for their products waning in America, Europe and Asia, many citizens and officials alike are beginning to panic.
So when Toyota Motor Corp. asked for a loaner from the government to help its finance arm cut funding costs, it wasn’t any shock when the government replied immediately yesterday that it will be using some portion of its foreign exchange reserves to help various companies during the economically trying times.
So despite Okasan Securities analyst, Yasuaki Iwamoto’s belief that “Toyota is not in danger,” but merely “out to get the lowest price for funding that the strength of its credit can get,” it will doubtlessly get some of the promised cash.
Toyota's flagship hybrid vehicle, the Prius, has been the world's most successful hybrid and has helped make hybrid cars mainstream. Their leadership in the energy efficient car segment has helped drive sales during a time of high gasoline prices. The hybrid technology is also intellectual property that the company generates revenue through technology licensing.
Japan’s Mitsubishi Heavy Industries Ltd. (PINK: MHVYF) has unveiled a plan to develop a "regional" jetliner for use by airlines all around the world. The controversial project gained global credibility in recent weeks after analysts began to speculate that Toyota Motor Corp. (TM) - the world’s No. 1 automaker by sales - would join the development team. Toyota subsequently confirmed its involvement, announcing plans to take a 10% stake in the venture and injecting $67 million to help get the initiative off the ground. The Japanese government is backing the program.
The potential payoff is hefty enough to warrant the risk. Such key global trends as rocketing fuel prices, soaring global travel, fast growth in Asia, Latin America and the Middle East, and ongoing problems with major air carriers across the world are stoking worldwide demand for efficient, economic regional jets. And that demand could persist until 2030, many experts predict.