Toyota Cutting Truck Production For Three Months
It was generally assumed by those permanently bearish on U.S. auto manufacturers that Toyota would steamroll the Big Three when they announced their full-size pickup truck. In reality Toyota's full-size pickup has cannibalized much of the prior generation of mid-sized Toyota pickups as opposed to significantly denting American manufacturers. My perspective is that the Ford, GM and Toyota offerings are all very capable and virtually indistinguishable except for perceived manufacturing quality standards and strong brand loyalty in this segment. And, with Chrysler's new and substantially upgraded pickup, we can add them to the same level of capability as well. These are all world-class products.
It's a different day than the 1970s when Toyota pounded the Big Three with fuel efficient autos and the only response was basically the Pinto and Chevette. Toyota is still selling small cars at a good clip but it is now feeling the pain of an expanded product mix. For the first time in the company's history, they are exposed to the economic risks of a full-line product manufacturer. As such, today Toyota announced it is shutting down production of it's full-size pickup truck for three months due to weak demand.
The very week Toyota's stock peaked this cycle, when Toyota was crowned king by most in the investment community, the post on here was amongst other comments, "While many are advocating a buy of Toyota or Honda stock here and now, I couldn't disagree more.". One of the reasons I posted that remark was an overly exuberant analysis of Toyota I had read at that time by a long-time Wall Street professional. The stock is now down nearly 50 points and it is going lower. Very likely much lower.
Toyota is still a mighty and great company but now it's a great company that has to deal with new risks. Those risks are yet to be fully recognized and the consequences to earnings are unknown. That means if there is a long term shift in the market, they will have virtually no advantage over other full-line product manufacturers in adjusting to changing trends except in those allowed for in business process efficiency such as time to market. Those gaps are closing rapidly as well and in many measurable benchmarks have completely vanished.
It's a different day than the 1970s when Toyota pounded the Big Three with fuel efficient autos and the only response was basically the Pinto and Chevette. Toyota is still selling small cars at a good clip but it is now feeling the pain of an expanded product mix. For the first time in the company's history, they are exposed to the economic risks of a full-line product manufacturer. As such, today Toyota announced it is shutting down production of it's full-size pickup truck for three months due to weak demand.
The very week Toyota's stock peaked this cycle, when Toyota was crowned king by most in the investment community, the post on here was amongst other comments, "While many are advocating a buy of Toyota or Honda stock here and now, I couldn't disagree more.". One of the reasons I posted that remark was an overly exuberant analysis of Toyota I had read at that time by a long-time Wall Street professional. The stock is now down nearly 50 points and it is going lower. Very likely much lower.
Toyota is still a mighty and great company but now it's a great company that has to deal with new risks. Those risks are yet to be fully recognized and the consequences to earnings are unknown. That means if there is a long term shift in the market, they will have virtually no advantage over other full-line product manufacturers in adjusting to changing trends except in those allowed for in business process efficiency such as time to market. Those gaps are closing rapidly as well and in many measurable benchmarks have completely vanished.
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