Toyota (NYSE: TM) has arguably been more successful in the US car market over the last 10 years than any of its rivals. Its high-quality, modestly priced cars have helped it consistently raise market share while GM (NYSE: GM) and Ford (NYSE: F) have lost ground.
Now, the Japanese company is beginning to realize that the US auto picture is so bad that even its quality and fuel-efficiency may have limits when the world's largest market falls into a recession. According to the FT, "Toyota, the world's top-selling carmaker, is considering downgrading its US sales forecast to account for a worsening outlook for pick-up trucks and other big vehicles in its largest market."
Toyota had hoped to sell 2.64 million vehicles in America this year.
Toyota's main problem is that it did not stick to its knitting. The success of pick-ups and SUVs was so significant that it began to invest in and manufacture its own gas guzzlers. The net result was that, as gas prices rose, it was trapped in the same box as the US car companies. Consumers will not buy trucks from any car company, no matter how good the product is.
Toyota will survive the downturn in the US. It has a tremendous balance sheet and does well in a number of markets, especially Japan. But, if car sales drop from 16.1 million units in 2007 to well under 15 million this year, Toyota's US rivals may not be so lucky.
Douglas A. McIntyre is an editor at 247wallst.com and the author of the Ten Stocks Under $10 letter.
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Reader Comments (Page 1 of 1)
6-02-2008 @ 6:31AM
al coholic said...
Toyota is not immune to gross marketing blunders. They spent a lot of money introducing it's Giant gas guzzling Tundra at precisely the worst time possible. The 380 hp, high price, and quality issues might have been enough to keep sales low but they were also bucking the one segment of the market that truly does "buy American."
Even giant rebates coudn't save the day for the Tundra. Even though Toyota has built great vehicles (I drive a Corolla) their future dominence is by no means a certainty. The Camry is "your father's Oldsmobile" and the average age of a Toyota owner is high enough to scare Toyota's marketing people.
I also think that Ford has done a good job of closing the gap in quality and rolling out more exciting models.