Problems for Toyota too

As everyone knows, GM and Ford are suffering big time – burning billions every month, desperately begging the government for bailout money – but you might be surprised that Toyota, the “intelligent” auto company that has been showing up the Big Three for almost two decades is also in its own house of pain. Its stock dropped 20 percent last week when it announced that it will make almost no money during the second half of its current fiscal year and expects full year profit to drop by 68 percent.

Much of this pain of course is the result of a suffering economy, but partly it’s the result of some of Toyota’s poor decisions such as putting out its full size Tundra pickup in 2007 just as gas prices were skyrocketing and American buyers started panicking.

Another reason Toyota is having trouble is its Japanese tradition of not laying off employees, even as factories sit idle. They may have the benefit of being non-union, but Nissan, Daimler, GM, Renault, Ford, Volvo and Chrysler have been able to cut costs by laying off workers. Notice that that list does not include Honda which I assume has a similar Japanese employment code of ethics.

One the flipside Toyota still has $18.5 billion in cash, almost no debt and is a leader in clean technology. It stated earlier this year that it was going to shift its Mississippi plant from producing Highlander SUVs to Prius hybrids. It plans to start producing hybrids faster and put out four new models next year.


Question: If you traditionally buy American cars and trucks, are you more or less likely to purchase one today as the Big Three beg for government money just to survive?

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One thought on “Problems for Toyota too

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