Toyota Motor Corp.'s (NYSE: TM) is going to lose money this year on its auto operations -- but as a group it will still make a profit. Does Toyota's loss mean that the U.S. automakers are off the hook? Only if you think that General Motors Corp. (NYSE: GM) was making money all the years that Toyota was. And that is most certainly not true.
GM has lost $74 billion since 2004 and its stock price has collapsed 95% since its CEO Rick Wagoner took over in 2000. Toyota made $28 billion in operating income in 2007. Meanwhile, Toyota will lose $1.7 billion in its automobile operations in 2008 but will earn a corporate profit of $560 million thanks to offsetting profits from its Daihatsu and Hino product lines. Moreover, Toyota has $18.5 billion in cash, and relatively little debt so it should weather the storm relatively well.
But this is not to say that Toyota does not recognize that there's a problem. It is slashing production to reflect a grim forecast for 2009 demand. Toyota also lowered its worldwide vehicle sales forecast for the current fiscal year to 7.54 million vehicles -- 15% below the 8.9 million vehicles it sold in 2007. And overall, the Japanese auto industry cut production by 2.2 million vehicles in 2008, laid off non-staff workers and delayed capital investment.
So far no evidence that the Japanese companies are looking to their government for a handout.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.
Reader Comments (Page 1 of 1)
12-22-2008 @ 10:37AM
Phil said...
What makes me laugh is that senator's Corker and Shelby wants me to go to TOTOTAS benefits and wages ? Well Toyota gives their workers LIFETIME employment , and they to have a jobs bank . What Rush Limbaugh and fox news not tell Americans and America that ? FAIR AND BALANCED ? LOL LOL . THEY DO , so i guess ill take a $2 pay cut and lifetime employment if thats in your bill SENATOR'S ? ... A BIG THREE UAW auto worker ...
12-22-2008 @ 5:02PM
autoworkers_are_overpaid said...
all these years the UAW has assured people with minimal skills and educations can make above average wages.... i mean seriously do you think you are worth more than $10/hr to put in 4 bolts?
the govt should NOT bailout the auto industry....supply and demand and survival of the fittest! a new company could develop where you get paid a percentage of the actual profit of the company! if you work hard you get rewarded, otherwise minimum wage for you! it is time the overpaid factory workers live like the rest of us from hand to mouth... the salaried workers is a whole nother mess.... do you know each worker has like 3 managers above them doing nothing but pushing paper and numbers to make themselves look good while the whole company is going down the toilet!
12-22-2008 @ 7:53PM
Walter said...
You must have took the buy out from the big Three and can not find a job.
autoworkers_are_overpaid said...
all these years the UAW has assured people with minimal skills and educations can make above average wages.... i mean seriously do you think you are worth more than $10/hr to put in 4 bolts?
the govt should NOT bailout the auto industry....supply and demand and survival of the fittest! a new company could develop where you get paid a percentage of the actual profit of the company! if you work hard you get rewarded, otherwise minimum wage for you! it is time the overpaid factory workers live like the rest of us from hand to mouth... the salaried workers is a whole nother mess.... do you know each worker has like 3 managers above them doing nothing but pushing paper and numbers to make themselves look good while the whole company is going down the toilet!
12-24-2008 @ 1:19PM
paul said...
Toyota people need to take a pay cut.