Even a global company like Toyota (NYSE:TM) cannot escape the slowdown in the US market. The Japanese auto company reported it Q4 profits dropped 27%, more than expected.
Bloomberg reports, "The slowdown in the U.S. really hit Toyota,'' said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments Ltd. in Tokyo, which oversees $28 billion in assets. "The market has yet to hit bottom.'' Indeed, for most car companies, US sales fell by double digits in April. Toyota did somewhat better, but "somewhat" is not enough.
The news reflects how difficult it is for multinationals to do well when the world's largest consumer market is doing poorly. It raises the question about what the financial results from large companies in Europe and Asia will look like as the year goes on.
The Toyota earnings are a sign that the US slowdown could move to export companies in places such as China and Vietnam, which rely heavily on selling goods into the American market. The bad news from America is starting to send waves to foreign shores.
Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.
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Reader Comments (Page 1 of 1)
5-08-2008 @ 6:19AM
al coholic said...
Don't blame Toyota's lower profits totally on economic slowdown. They have suffered a number of quality and marketing problems. The Camry is peceived as "your father's Oldsmobile" and the Tundra truck with it's horrible gas mileage and sky high prices coupled with a huge recall due to engine problems are also a big part of the problem. Toyota was forced to offer enormous rebates just to get them moving, something they are not famous for.
Have you seen the new Ford commercials announcing that their quality is now as good as Toyota? A brilliant advertising move on their part which will give a lot of people looking for a reason to buy American justification.
5-08-2008 @ 10:06AM
william lindblad said...
Given current economics - the entire auto industry will slow. This has a ripple effect as the suppliers will do the same. It just feeds the downward spiral that is already present in other sectors. Home improvement, eating out and the hotel industry are not going to have a stellar year. Retail is already being hit along with the airlines. Entertainment and the discount stores will be the only areas of strength for some time to come.