Toyota gambles with Fire Sale Prices over piling inventory!!! (Cross posts removed)
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From: Mike on 1 Aug 2010 19:26 New vehicle buyers are still buying vehicles, current selling at a rate of about 12,000,000 annually, up from 10,000,000 in 2009, but well below the high of nearly 19,000,000 during the boom years of the Bush administration. Contrary to what the Dims would have us believe the economy grew at a very healthy rate of over 3% annually, except the last year when it fell below 3%, but that was still better than what BO(ZO) has been doing a just over 2%. "hls" <hls(a)nospam.nix> wrote in message news:6oidnUmj7eb2ZMjRnZ2dnUVZ_vWdnZ2d(a)giganews.com... > > "john" <johngdole(a)hotmail.com> wrote in message > news:d52dbe8c-90e9-421e-966c-d2d961239309(a)s24g2000pri.googlegroups.com... >> Looks like inventory is piling up, and a good way of doing a fire sale >> is Low Lease Rates to riskier customers (sub-prime?) instead of Cash >> Incentives. > > > Lots of companies are feeling a crunch because people dont have jobs > like they once had. Some are still offering 0% interest loans for up to > 6 years, just to try to move some inventory. > > I dont think Toyota is still suffering very much from the recall problem. > > If people have money to spend, they will continue to buy some cars, but > maybe not with the reckless abandon they did a few years ago.
From: Mike on 4 Aug 2010 11:58 Toyota will need billions more than that to pay for all of the litigation that is coming "ACAR" <dimndsonmywndshld(a)yahoo.com> wrote in message news:c58c8b14-75ce-4678-b025-b7f6da99cdde(a)d17g2000yqb.googlegroups.com... On Aug 1, 2:33 pm, john <johngd...(a)hotmail.com> wrote: > Looks like inventory is piling up, and a good way of doing a fire sale > is Low Lease Rates to riskier customers (sub-prime?) instead of Cash > Incentives. > > "For Toyota, the deal could be a financial disaster. snip "May 11, 2010, 3:16 a.m. EDT TOKYO (MarketWatch) -- Toyota Motor Corp. Tuesday said it swung to a net profit of 209.46 billion yen ($2.26 billion) in the fiscal year which ended in March, reversing a year-ago loss, and predicted the current year would also be more profitable despite its recent plague of recall woes." A $2.26B net profit disaster? Heh.
From: C. E. White on 4 Aug 2010 12:45
"Mike" <mikehunt2(a)lycos.com> wrote in message news:NOmdnfnzua6FE8TRnZ2dnUVZ_v6dnZ2d(a)ptd.net... > Toyota will need billions more than that to pay for all of the litigation > that is coming > > "ACAR" <dimndsonmywndshld(a)yahoo.com> wrote in message > news:c58c8b14-75ce-4678-b025-b7f6da99cdde(a)d17g2000yqb.googlegroups.com... > On Aug 1, 2:33 pm, john <johngd...(a)hotmail.com> wrote: >> Looks like inventory is piling up, and a good way of doing a fire sale >> is Low Lease Rates to riskier customers (sub-prime?) instead of Cash >> Incentives. >> >> "For Toyota, the deal could be a financial disaster. snip > > > "May 11, 2010, 3:16 a.m. EDT TOKYO (MarketWatch) -- Toyota Motor Corp. > Tuesday said it swung to a net profit of 209.46 billion yen ($2.26 > billion) in the fiscal year which ended in March, reversing a year-ago > loss, and predicted the current year would also be more profitable > despite its recent plague of recall woes." > > A $2.26B net profit disaster? Heh. I think the reason the original post said this might be a disaster is becasue Toyota has lowered it's credit standards for individuals leasing cars. If the economy goes south, then a lot of those leases could go bad and Toyota could be stuck with a lot of repo'd cars and worthless IOUs. Some (much?) of the current profit is likely based on cars leased to individuals with shaky credit. While booking the profit on those cars might look good this year, the potential for disaster is there. Go back and look what happened to home builders a few years back to see what can happen. Another potential downside is that Toyota may be over stating the residual values in an effort to provide the lowesrt possible lease terms. Ford did this when they introduced the Expedition SUVs. A lot of leases were written assuming a very high residual value. A few years later when the leases were up, the actual value of the vehicles was far below the originally assumed residual value. Ford Motor Credit had to eat the difference on the leases that they wrote. I'll bet Toyota is assuming that the residuals on their vehicles will eventuially recover (they are down as a result of the many recent Toyota quality problems). If they are wrong, they'll end up eating the difference between what they thought the lease returns will be worth and what they actually can be sold for. So todays profit might turn into 2013's loss. But, like someone else once said - "In the long run we all are dead." I don't think this is a Toyota specific concern. I feel certain all automobile companies are doing similar things. My guess is that Hyundai is probaly the most exposed if leases start going bad, but that is only a guess. Toyota needs to reestablish momenum. Reporting profits, even ones that may be dubious, will help get the ball rolling and help renew Consumer confidence in the brand. While I think Toyotta vehicles are average to slightly above average, I think Toyota has by far the most savy propoganda machine of any car company (only Honda is close, and they have better products to work with). Toyota has repeatedly convinced peopel that a sows ear stamped with a "T" or an "L" is the eqivalent of a silk purse. Ed |