Monday, May 11, 2009

Toyota's Problems And Remarks On The Industry In General

We have been negative on Toyota's stock for years. Product mix is very unfavorable and the company has overextended its expansion. Within days of the stock's peak we wrote a post stating we did not like the company's stock. And, then when the carnival barkers were telling us that GM should fail if Toyota could make a better product, we wrote that Toyota was likely in trouble and that by the time this crisis ended all global automakers would likely be bailed out.

The best managed mega-industrial company on earth inches closer to bankruptcy. Of course, they have already received bailouts from the Japanese government. But will it be enough? Toyota is now losing more money than GM and our remarks were completely accurate. As we have noted, this is not a normal time and GM's current problems are not primarily because of failed management. Although there is no doubt we have seen forty years of it.

Carnival barkers are free and liberal with their uninformed analysis. As we wrote on here years ago when the global economy was steaming ahead, I am absolutely bullish on the American auto industry regardless of whether they end up in bankruptcy in the interim. And, we wrote that we were very bullish on Ford in particular. Ford is now outselling Toyota again in the US and has the most favorable product mix of any major auto manufacturer in the US starting in 2010 - the best selling vehicle in the U.S. for the last forty years in its pickup line, a substantially revamped lower-cost fuel-efficient auto lineup and a transformed business and business processes led by one of the best management teams in the world. Regardless of intermediate term concerns, I remain firmly bullish on American auto company's long term prospects. And, this is from someone who has been bearish on the auto industry since my days of co-oping at GM in college.
posted by TimingLogic at 8:42 AM