They'll sell them overseas? Hardly. Toyota has that market all sewn up!............
Posted on 08/07/2008 12:57:53 PM PDT by Red Badger
Toyota Motor Corp. said today that its first quarter net income dropped 28.1% to 353.6 billion yen, or $3.2 billion, mainly due to the impact of exchange rates between the yen and the dollar, higher raw material costs and the turbulent U.S. market.
While Toyota worked to cut costs and said global vehicle sales increased by 24,000 to 2.19 million vehicles, it wasn't enough to overcome a plunge in sales in the United States and Western Europe.
For the three months ending June 30 Toyota's total revenue declined by 4.7% to 6.22 trillion yen or $56.9 billion.
"The financial results for this quarter were severe, due to our rapidly changing business environment," Mitsuo Kinoshita, Toyota's executive vice president said in a statement.
Toyota said the decrease in sales volume, the shift of product mix to compact cars, and an increase in sales expenses such as incentives and increase in reserves for bad debts, resulted in the profit decline.
The strengthening yen compared to the U.S. dollar cut profits by 200 billion yen or $1.8 billion while operating profit for Toyota's financial services unit dropped 21.8 billion yen or about $199 million.
Toyota began putting a cost reduction program in place earlier this year, but Takahiko Ijichi, Toyota's senior managing director, said during a conference call that all of the company's gains were wiped out by higher steel, plastic and other raw material costs.
Toyota has also struggled this year to produce enough small cars and hybrid vehicles to satisfy demand as gas prices soared above $4 a gallon in the United States and has also been hit by a steep industrywide decline in pickup and SUV sales.
"Toyota will take swift action in accordance with market changes by increasing the supply of models in high demand and launching new models," Ijichi said.
In July, Toyota announced that plans to begin assembling the Prius gas-electric hybrid are scheduled for 2010 at a plant in Blue Springs, Miss. Toyota also is suspending production of its Tundra pickup and Sequoia SUV beginning this week through mid-November.
Despite all its troubles, Toyota said its U.S. market share reached 17.4%, a record high, and the company stuck to its profit outlook for the year will be 1.25 trillion yen.
"The whole strength of the company is to flexibility to adjust to the market," said University of Michigan professor Jeffrey Liker. "This is like a minor headache compared to a deadly virus for the American car companies, but Toyota is not used to that."
Doesn't take a genius to understand why...
Yeah, the *best run car company in the world* still managed to build a brand spanking new $1.2 billion Tundra plant in San Antonio just as gas started its upward run to $4.00 / gal.
One major problem is people are looking to buy the lowest cost high millage vehicles. The striped down vehicles have a razor thin margin and have the manufacturers caught.
Not quite what happened. Toyota had to raise prices because of the exchange rate.
In addition, the reduced profits were mostly because people stopped buying trucks and SUVs from pretty much all makers. It’s so bad that Ford’s practically giving the F-150 away and they’re going to shut down the F-150 plants for 3 months to clear inventory.
They’d planned that for years. Gas running up like that was just an unforseen event.
I mean, who would think that the Democrat Congress would be THAT stupid? Oh, wait....
Not just Toyota, everybody was on the SUV/Super Sized Pickup Truck bandwagon. A big company is like a big ship, it doesn’t turn around quickly......................
Our local Ford dealer has two acres of pickup trucks and SUVs sitting in the Florida sun, fading away.................
Big Dealers are making plans to ship them out wholesale on ships to countries where gas is still free.
Exactly. Especially since most of their car models’ sales were actually *up*, not down. Despite the exchange-rate-caused higher prices.
The reduced profit is caused specifically by truck and SUV sales being down.
“Yeah, the *best run car company in the world*”
Of course they did just reach their highest US market share ever this quarter and still were able to make a profit in the face at a time when American companies are losing billions.
Toyota and Honda have become jokes in the pricing department, they are making the same mistakes of the Big 3 before them....
This has let the Koreans pick up the slack, and they have done a pretty damned good job.
The next cycle like this will be when the Korean’s do what the Big 3 and the Japanese have done, in about 15 years or so, and then the Chinese and the Indians will do what the Koreans and Japanese did before them.
Any company who writes off the small afforable basic car as nothing more than an afterthought, sets themselves up for long term problems, period.
Most of the US Company problems are due to legacy costs.. since the foreign companies don’t have them, its not overly suprising they are profitable. GM and F would be profitable tommorrow if they weren’t carrying the legacy health care and pension costs of their retired workers.
The decline in the dollar has more to do with it than anything Detroit has done.
Um, actually, they haven’t. See the Toyota Yaris and Scion xA or Honda’s Fit.
They do cost more than their Korean competitors, but not much, and they’re slightly better quality as well.
Korean cars offer more features for the same price, though. And their quality is certainly acceptable.
They'll sell them overseas? Hardly. Toyota has that market all sewn up!............
No. They still have too many products, too many products people don’t want, and too many enraged former owners who will never come back.
They offer more features at a lower price.
Look for example at say a KIA Sedona EX vs a Honda Oddessy.. or a Hyundai Sonata/Kia Optima vs a Camary/accord.
The base models Accent/Rio vs the Fit or Yaris.
every time the Japanese are beat on price, and the farther you move up the model chain the greater the price differencial.
I can walk into the KIA dealership accross the street and buy a new rio for 9888 (I’m sure I’d get it for less, but that’s the price they are willing to put in the window) You aren’t getting a yaris of fit for that, and you aren’t even in the ball park for a FIT.
The FIT starts at nearly 14k, hardly a price bargain for a sub compact. At that price you are at low end family sedan pricing. Yaris is a bit better at a little over 11k base, but still more than it should be.
The one japanese company that is still offering good value for the $$ is Suzuki.. the others are not offering nearly the value they once did. They are charging more and people have been willing to pay.. now that the economy is slowing there won’t be as many folks willing.
they were selling as many suv’s as anyone else and the bottom fell out.
Sorry, but you look at their financial statements, the bulk of their outlay that makes them not profitable is none of the issues you have brought up. Its oppressive legacy costs, that the japanese etc do not have.
All companies have seen their sales of large vehicles go down, Detroit had too much focus on them because they were the higher margin vehicles that could help them cover those high costs. When you look at their financials they have huge obligations that the japanese do not have.. those obligations take cut of the sale of every vehicle sold in order to be met... meaning they cannot make a profit on the same level of dollar sales as a japanese or korean company.
I won’t say the big 3 haven’t made there share of mistakes, but the reason they are in the red is because they have debt obligations that others don’t. Without them they’d be hurting today, but not losing money.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.