Stocks: (TM)(GM)
Toyota’s stock has run from $100 six months ago to about $122 now. But, over the last month, it is actually off slightly from $125.
It makes sense for the stock to pause after a big run-up.
The question remains open as to what might drive TM shares higher. The company is indicating that its will pass GM, probably in 2007, as the world’s largest car maker. The Japanese firm should sell well over 9 million vehicles next year. That will be hard for GM to match.
The battle is the US is certainly being lost by the American companies. GM had a market share of about 33% ten years ago. That is now down to 24%. Over the same period, Toyota’s share rose from 8% to 15%.
Part of the problem that the Big Three have in the US is that Toyota regularly outscores them in quality surveys from firms like JD Powers and Consumer Reports. Customers want the better cars.
But, as Toyota grows and expands the foot print of its assembly plants, it may be falling victim to quality problems of its own. Even Toyota’s top management is saying that it may be pushing out new models without sufficient quality measures in place. Toyota President Katsuaki Watanabe now says that the company will delay some product introductions to make certain that quality issues do not continue. The decision may force Toyota to sell some products longer than planned, which is probably a drawback for unit sales forecasts.
Toyota is now so large that if it stumbles, it will not be from competition but from a lack of managing growth.
GM knows that. It found out the hard way years ago.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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