Why Toyota Stock Was Gaining Today
What happened
Shares of Toyota (NYSE: TM) were moving higher Thursday in what seemed to be a response to an expansion of the United Auto Workers strike against the Big Three automakers.
Last night, the UAW expanded its strike to Ford's (NYSE: F) largest and most profitable plant, a move that seems equally directed at General Motors (NYSE: GM) and Stellantis (NYSE: STLA), the parent of Chrysler, to get them to sweeten their offers.
The news pushed shares of the Big Three domestic automakers lower Thursday, with Ford down 2.2%, GM off 2%, and Stellantis off 1.3% as of 10:18 a.m. ET.
At the same time, Toyota stock was up 2.2% after having climbed by as much as 2.8% earlier in the session.
So what
The UAW strikes are seen as an opportunity for non-union automakers to capture market share, and Toyota appears to be one of the biggest beneficiaries.
Toyota, after overcoming earlier supply chain problems, is ramping up production, and its vehicles tend to compete well with those sold by the Big Three on price. The impact of higher interest rates could also lead more car buyers to shift to lower-priced Toyota models.
With the move to halt production at Ford's biggest plant, the UAW seems to have shifted from a largely "stand-up strike" strategy that's intended to minimize disruption to a strategy more likely to impact production, and thus bring negotiations more rapidly to a head.
Toyota also announced a deal with oil refiner Idemitsu Kosan to develop and mass-produce solid-state batteries, aiming for full-scale production in 2027 or 2028, though the strike news seemed to be the primary reason for Toyota's share price gains Thursday.
Now what
The UAW strike has lasted about a month so far, and Toyota stock has fluctuated throughout the work stoppage as investors try to assess its impact on the broader vehicle market. The auto stock is about flat over the last month.
Keep an eye on how the strike unfolds, as significant production cuts at Ford, GM, and Stellantis would not only give Toyota an opportunity to gain market share, but would also lead to higher prices for new vehicles.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends General Motors and Stellantis and recommends the following options: long January 2025 $25 calls on General Motors. The Motley Fool has a disclosure policy.
