Good article on Prius and Toyota and profitability

“Toyota shouldn’t be happy just because Prius orders are going up, What should worry it now is Lexus and high-end customers may shift to driving a Prius.â€

This applies to me. My ordered Prius V will replace my Lexus RX as my only vehicle. I would have considered the HS250 but desire the flexibility of a hatchback. Same for Fusion BTW. I wanted to downsize, and upsize MPG. Sure hope I'm happy with the decision a few months from now.

Once Akio Toyoda, the grandson of the founder of Toyota, becomes president, he may further slash costs, including cutting Japan capacity and workforce by at least 10 percent, reducing 20 platforms and 70 model types by 10 percent...

With a quick turnaround not in the cards, wonder how this cost-cutting will impact quality and new vehicle development - as well as the completing of the Prius Mississippi plant. Who would have thought that high-flying Toyota would be encountering such serious issues?

 

OK, the article interestingly mention that Toyota is "Japan’s most unprofitable carmaker"... not that I care much at this point with my new Prius arriving soon, but just for the record, when I said the same thing in an old post, I got bashed big time here...

 

It is time to sell your toyota stock. They are like a deer in the headlights right now, they are so used to everything they touch turning to gold, now they don't know what to do. The same can be said about much of the dealer body. Toyota is where GM was 25-30 years ago, at least in the US market. Other than the Prius the recent model launches have been luke warm at best.
Venza, seqouia, camry(steady seller but not a great car, alot of fleet), tundra............how about the scion brand, remind anyone of saturn?

 

What a funny reply ... Toyota doesn't know what do do ... while GM languishes in not knowing what to do. Let's see, Toyota is ramping up production of their fastest selling hybrid. Seems they're doing right. It's inexplicable that some folks understand perfectly, that the world is undergoing an economic, fuel, & power paradigm shift, yet not be able to understand it as it applies to transportation.

" ... said Masayuki Kubota, who oversees about $1.9 billion at Daiwa SB Investments Ltd. 'Toyota needs the cash cow models in the U.S., like the Lexus and the Tundra ...' "

Whoever this Kubota from Daiwa SB Investments Ltd is ... he'll probably be out of work in a few days, after showing he doesn't know what page the world is on. Sell more big vehicles? Er, no, that's how manufacturers got IN this mess ... depending on "cash cows" as they call 'em. A better term is over priced poorer mileage vehicles. The dinosaur era is comming to a close Mr Kubota.

 

Kubota is simply stating the obvious. Toyota and all automotive manufacturers make the majority of their profits on the sale of luxury cars and light-trucks. If the sales of these models declines it hurts a companies profits far more than if the sales of low profit vehicles decline.

As the article stated Toyota has to sell ~10 Prius to make the profit they make on one Tundra.

 

<AHEM!>Another external to Toyota expert declares they know the Prius profit. ...

Bob Wilson

 

Well, that's my point . . . the days of easy profits via big guzzlers are by gone. Hopefully the painful transition will go as smooth as possible.

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This is a typical GMI wetdream. You purport to be in the auto industry but you so often make such stupid remarks that I wonder if you actually know anything about the subject. Mostly what skews your pov is a simple lack of knowledge. So I'll forgive you for that.

 

And this is where Toyota's system will prevail. Both statements are obviously correct as is the article. There's nothing earth-shakingly new to see here.

Trucks and SUVs have always been known to have margins in the $10000 to $20000 range depending on options. Small and midsized autos run from $1500 to $3000 depending on options. A Prius at $1000 sounds about right IMO.

It would be wonderful for the makers of trucks and SUVs to have those segments continue onward in unabated growth but that simply is not going to happen. These segments are shrinking if not dying. Life changes and moves on.

Now the goal is to make as much money as possible from a shrinking BOF vehicle segment while cutting costs and increasing efficiencies in the small and midsized segments while hoping that the crossover segments return to life somewhat in the near future.

Every vehicle maker including Toyota will have to rebuild its product lineup and fight harder for the fewer customers that are in the market today. Toyota has a huge lead over most other makers in that the Camry/ES, Corolla, Tacoma and Prius are the respective leaders in their segments. The RAV and Sienna are right at 1st or 2nd in their respective segments. The Venza/Highlander/RX triplets outsell all the other midsized crossovers by a huge margin. These just happen to be the main growth segments in the NA market. That's a good place to be.

 

Sales of luxury cars are effected far more by the general economy than by fuel prices. People that buy luxury cars can afford the gas bill. With that in mind the only way adding hybrid options to luxury platforms makes sense is if they can increase the volume of sales because luxury buyers want hybrids.

I doubt buyers of a $106,000 LS600h are spending the extra $30K over a LS460 to save $250 a year in gas. Instead they have a lot of money and what so show it.

You also may be seeing the same LS600h on the road every 2 weeks because Lexus only sold a total of 980 in 2008.

 

With your recent $20/bbl oil call and GM's bankruptcy I find your suggestion to be a contrary indicator.

 

Historically, the accepted opinion was always that Japanese companies only cared about market share, not profits. Even today, no-one buys Japanese stocks for the dividends. There must be comparatively little shareholder pressure for management to deliver high earnings.

Aren't the hybrid systems in luxury cars there for better performance (without the guilt trip of worse emissions)?