The value of the shares in VW, Europe's largest car company, may have passed those of Toyota (NYSE: TM) for some of the wrong reasons, but it has become the world's most valuable car company nonetheless. VW is facing a possible buyout from its largest shareholder, Porsche, and that may be keeping its shares high.
However, the fact of the matter is that Toyota's share are down. And for good reason. According to Bloomberg, "Toyota has fallen 56 percent since its peak at 8,340 yen in February 2007. By contrast, Volkswagen rose to all-time high at 304 euros on Sept. 18."
The facts behind the reversal may be fairly simple and they may not go away soon. Toyota has substantial exposure to the moribund U.S. market where auto sales are dropping as much as 25% some months. While VW would like to be in North America with more market share, it may be lucky to be a bit player for now.
To demonstrate how tough the US car environment is, shares in Ford (NYSE:F) dropped to to $2.92 yesterday, a multi-decade low, and down from a 52-week high of $9.24.
It used to be that having a big market share in the U.S. was the most desirable thing in the world for an international car company. Having almost no share may be better now.
Douglas A. McIntyre is an editor at 247wallst.com.
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