Toyota and BMW Expand Partnership - Analyst Blog


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Toyota Motor Corp. ( TM ) and Germany's premium car maker Bayerische Motoren Werke ("BMW") have signed a new agreement to extend their existing collaboration. So far, the collaboration has been working on green car technology (such as electric car batteries) and diesel engines.

In December last year, under the agreement, BMW agreed to supply diesel engines to Toyota from 2014 in Europe while Toyota decided to collaborate on lithium-ion battery research for electric cars. The extended agreement will include four areas including hybrid power trains and lightweight design.

BMW intends to reduce carbon emissions of new car fleets by roughly a third to 101 grams per kilometer by 2020. As a result, the company was seeking new partners to develop hybrid car technologies.

BMW has already failed to strike an agreement with General Motors Company ( GM ) to access latter's hydrogen fuel cell technology. Late June, the company's attempt to manufacture hybrid car components with French automaker PSA Peugeot Citroen was also aborted as the latter began to deepen ties with GM's European car division, Opel, to save costs. 

Opel formed a strategic alliance with Peugeot in order to reverse losses in Europe on the back of economic crisis. The pact will help both the automakers reduce at least $2 billion in costs.

Toyota, a Zacks #1 Rank (Strong Buy) stock, posted a 30.5% decline in profits to ¥283.56 billion ($3.7 billion) or ¥90.20 ($1.17) per share in its fiscal year ended March 31, 2012 compared with ¥408.18 billion or ¥130.16 in the prior fiscal year. With this, the company has missed the Zacks Consensus Estimate of $2.52 per share for the year.

Consolidated revenues in the year dipped marginally by 2% to ¥18.58 trillion ($241.59 billion). Total unit sales increased 0.6% to 7.35 million units during the fiscal year. Higher unit sales in Japan (8%), Europe (0.3%) and Asia (6%) were significantly offset by lower sales in North America (8%) and Other reporting regions (2%).

The decrease in revenues and profits was attributable to challenges faced by the company owing to the earthquake in Japan and severe flooding in Thailand in 2011 as well as unprecedented strength of the yen.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: GM , TM

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