) has had a good year. The company's stock is up more than 30%
since the start of the year, helped by strong earnings and a
positive outlook. Its sales suffered in 2011 due to production
constraints, but the fact that sales have rebounded in 2012 is
reflective of sustained customer interest in Toyota's
vehicles. However, some recent developments indicate that
things might get tougher for the automaker in the coming year.
See full analysis for Toyota Motors
North American Pressure
Toyota's Prius accounts for about 12% of Toyota's American
sales, but its dominance could fade as rival automakers introduce
new and improved hybrids and electrics. Ford's hybrid C-Max,
launched in 2012, received good reviews and outsold the Prius by
400 units in October. The Michigan-based automaker also debuted a
new plug-in called C-Max Energi at the recently concluded Los
Angeles auto week. At the same event, GM unveiled a new Spark EV,
with the lowest priced model costing less than $25,000.
Toyota's star seller, Camry, is under considerable pressure now
that the refreshed models of Honda Accord and Ford Fusion have been
introduced. Moreover, the U.S. automobile market may not be
able to replicate its 2012 growth rate due to weakening of
macroeconomic environment caused by the fiscal cliff. North America
accounts for about a fourth of Toyota's global sales so any
disruptions here will have a significant impact on its total
Negative Japanese Market
Japan's economy suffered in 2011 due to natural disasters like
earthquakes and a tsunami. To help lift the automobile market, the
government provided tax incentives to encourage people to buy
cars. Japanese buyers rushed to purchase new vehicles before
the subsidies ended in September, and now with its expiry the
market is expected to decline next year. The automaker forecasts
its Japanese sales to fall as much as 20% next year. Sales volumes
in Japan account for 30% of Toyota's total sales volumes.
China Still A Worry
Sales of Japanese automakers have suffered due to an
anti-Japanese backlash in China. As a result, Korean and German
automakers are benefiting at the expense of Japanese automakers in
this region. Sale figures showed
in November and we can see them getting back to normal in the next
2-3 months. Toyota had earlier targeted sales of 1 million
vehicles in China, but now it has lowered its expectations to be no
more than 800,000.
Still, escalated tensions between the two nations could send the
sales plummeting just when things might begin to appear normal.
China is the world's largest automobile market and Toyota's
inability to capitalize on this huge, growing market will have a
considerable effect on its long term profitability.
We currently have a $91 price estimate for Toyota's stock,
which is about 5% higher than the current market price.
How a Company's Products Impact its Stock Price at