3 - 6 - 5, Toyota takes a break

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"Overnight, Toyota reported that its U.S. sales in December were down 37 percent on year, a worse drop than Ford Motor Co.'s 32 percent drop and General Motor's 31 percent slide."
Toyota to suspend production for 11 days in Japan - Yahoo! Finance
(before the math whizzes say that this is "percentage" and Toyota sold more cars than Ford and GM last month, so of course the percentage drop will be higher, first take note that these numbers are "year on year;" meaning Dec.2007 versus Dec.2008. In Dec.2007, gasoline was still in the $2.xx range. People were still buying SUVs back then)

I'll bet there's thousands of people that just can't wait until the new Ford Fusion hybrid comes out so they can trade in their Prius.

(An article yesterday said Prius sales were down 42% from Nov. to Dec. - but when you compare that to the fact that Toyota's overall sales are down 37%, it's really insignificant, in fact it could be seen as a positive; the Prius is continuing to sell almost as well as all other Toyota vehicles)

Here's why GM and Ford sold more vehicles: ZERO percent financing, huge rebates (they just wanted to clear the excess inventory in the pipeline and get some liquidation - remember, when a car is "financed," the mfg and suppliers get their money up front from the bank that is making the loan.

LISTEN TO THIS!!! Hyundai announced that anyone who buys a car from them right now, if that person loses their job within the next twelve months, they can bring the car back and the payments stop (I'm pretty sure they'll lose their downpayment though). Since the US unemployment rate is already 6.9%, the percentage of people that will lose their jobs in the future (provided the economy doesn't take a turn for the worst) will be very small. The odds are in Hyundai's favor.
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On December 19, oil was at $33.87, and right now it's at $48.81 due to the fighting in Gaza. http://news.yahoo.com/s/ap/20090106/ap_on_bi_ge/oil_prices_18 Doing the math, gasoline in the US will be back to $2.00/gallon in early February. Automakers better hurry the heck up and get rid of those zero-percent financed SUVs before it's too late.
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While GMAC has opened up for 2009 now that they have billions in federal investment, it wasn't that way in December. Until 2009, GM dealers financed exclusively through GMAC and from October - December you had to have a FICO credit score of 700 to get financed through GMAC.

Toyota is into the huge financing game as well; $4,000 cash back or O% financing for 72 months on a 2008 Tundra or Sequoia. This isn't just confined to trucks and 2008 models either. You can get $1250 cash back or 0% for 36 months on a 2009 Corolla or Matrix. $1500 cash back or 0% for 36 months, 3.9% for 60 months on a 2009 Camry.

New car incentives, auto rebates, dealer incentives at Edmunds

 

The list of vehicles that don't have manufacturer incentives is interesting and short. I threw out the offer but remember that GM excludes the Corvette ZR-1 and Cadillac STS. The Prius is not on Liberty Toyota's list for financing or rebates.

GMAC lost its exclusive GM programs when it accepted bailout money.

I don't believe anything is selling well and that production everywhere will need to be cut back further throughout the year.

 

First of all Toyota did not sell more vehicles in December than GM, they sold about 2 thousand more than Ford. GM has had no financing available period for 3 months so stop commenting about things you have no idea about.
Toyota is scared shitless right now and it will be interesting to see how they respond. Hundreds of thousands of unsold cars at the ports and in transit from Japan. They have tons of cash, but they will need it.
Toyota has the glut of SUVs, not GM and Ford.

 

I take it that this phrase is a euphimism (sp?) for "acting in a forward-
looking and responsible fashion given the long term uncertainties of
reduced consumer confidence, and the global auto and credit markets."

In turn, history would show that over the last decade or more, and
especially in the last few months, GM has never been "scared s**tless."

One would hope that in it's new corporate mindset GM can see benefits to
itself, its invertors, its workers, and the country as a whole, and discover
and embrace this concept...

I wonder if "scared s**tless" is recognized as a "best practice" in the
Harvard School of Business?

 

It is the "pros" from the Harvard School of business, Yale, etc who got us into this mess. Funny how economics in the "real world" can be a little different than theoretical economics.

As for Toyota, they have entered an economic time that they are ill-prepared to deal with: Layoffs, high inventories, high incentive spending, potential political backlash(not just in the US), and a reinvigorated GM and Ford.
"acting in a forward-
looking and responsible fashion given the long term uncertainties of reduced consumer confidence, and the global auto and credit markets."????????????
How did the Toyota-laced kool-aid taste?

 

I work at Toyota in Georgetown they announced today starting next week they are going to a four day work week. Friday will be a non production day you can come in and clean and paint or stay home with no pay..They really didn't set a time table they just said until further notice..They also said no one is to have any overtime unless approved by the manager..I hope things turn around in the near future...

 

I find this a most curious sentence.

Although it is proposed as a argument in support of GM, the two underlined
words are interchangeable.

Therefore, it has no meaning whatsoever.

 

I am afraid it will get much worse before it gets better.

 

No, I think he's right. The Big 3 are much more used to dealing with Layoffs, high inventories, high incentive spending, and potential political backlash.

Rob

 

Would you include pulling the plug on additional Prius production and deciding not to produce the Prius in the United States, in your definition of Toyota and their "acting in a forward looking and responsible fashion"? If so, did Toyota pull the plug on its Prius plant in Mississippi because long-term Prius demand in the US will not support the plant? World-wide Prius demand will not support more Prius production or because Toyota is scared *hitless and in unchartered territory for them?

 

Toyota may well be sitting on a ton of vehicles, but I know that GM is at least sitting on about 3/4 of a million cars that are unsold.

That's about 3/4 of a year's inventory.

Ouch.

 

Where would PC be without the familiar anti-Toyota drone of Malron
"Booo ! ! Toyota Booo ! ! same ol same ol

 

3/4 of a year's inventory? What?

 

I take it as one of my responsibilities in life, whether I am reading them on PC or hearing them on the radio, when I hear Toyota vs GM mythology I have to state the facts. I am sure you would do the same to defend disney.

 

Yes.

These two sentences are laughable. You would have it that the conditions
you describe apply to one single vehicle maker, Toyota. That simply isn't
true. To prove that, let's do a simple substitution, for Toyota we'll insert,
"vehicle makers;" for Prius we'll use, "vehicle." If the resulting sentences
are true, then you are still up to your tiresome, data skimming tricks.

So, here we go:

If so, did vehicle makers pull the plug on its vehicle plant [in Mississippi]
because long-term vehicle demand in the US will not support the plant?
World-wide vehicle demand will not support more vehicle production or
because vehicle makers [is] are scared *hitless and in unchartered
territory for them?

That is a general but valid description of the situation that every vehicle
maker across the globe is facing, even, or more probably especially GM. So
all vehicle makers are, with respect to the worldwide economy, in
uncharted territory, escpecially those that by their own admission are on
the verge of baankrupticy, collapse, takeover, or merging. And who would
then be most likely to be "scared *hitless and in unchartered territory for
them?" Well, golly-gee, that would be GM.

So, once again, you are trying to sell a tired self-serving company line
using thinly disguised verbal trickery.

 

Did you ever see the movie "Miracle"? At the end of the game the Russian coach does not call time out, he does not pull the goalie to add another skater. He has never been behind late in the game. A very good analogy to what is happening at Toyota right now. Obviously Toyota has tons of cash, but it will be very interesting to see how they respond. In my opinion, stopping the plant in Mississippi for the Prius is not the type of decision that spurred their tremendous growth over the last 25 years. They will soon have to begin permanently laying off workers, which will completely change the Toyota employment dynamic.

They are in the same position that GM was in the early 1980's, they have read far too many press clippings and now they believe it. Soon they will make a Toyoda head of the company for one reason and one reason only, his last name.

 

In Sacto, gasoline is already $2.00/gal. In SF = More

 

OK, double checked my numbers, looks like I was off quite a bit in my recollection. But it still doesn't look good.

As of the beginning of the year, they have about 900,000 vehicles in inventory.

In 2008, they sold almost 3,000,000 vehicles.

So looking at that, that's 1/3 of a year's sales sitting on lots.

But, if you take into account that sales have significantly slowed down in the last quarter of the year and are unlikely to improve unless Obama & Co can pull off a miracle, sales are likely to remain low or even dip lower.

Either way, sitting on 120 days of inventory or a million units is not good.

General Motors Corporation Global Sales Call Transcript - Seeking Alpha

Another interesting tidbit is that they've reduced truck inventory from 60% to 35% with a target inventory of 25%.