Toyota stock

[cheerio]

It is going to take a little time for me to look at this stock, public image will atake a while for this to recover, bad public image means low sales and low stock price

[elessar78]

Originally Posted by cheerio

It is going to take a little time for me to look at this stock, public image will atake a while for this to recover, bad public image means low sales and low stock price

Right, which is why it would be a good buy "now" (if the price dropped another $25 or so) and not in the potentially long while it takes to recover. The bad public perception (which should not reflect reality in this case) is exactly what you want so it drives the stock price down for no relevant reason.

[Broken Arrow]

Ugh. Looks like the market is already pricing Toyota back. Toyoda has already announced a global, mass recall, and yet, the stock is going up 1.7% at this point.

Well, I think part of it is the fact that Honda has also come out and announced a large recall to fix their air bags. TM and HMC have been going back and forth throughout this recall story. HMC is currently at -2% today.

I don't know about you guys, but as it currently stands, both are looking less and less appealing. Neither company seems like it's going to be on a good sale anytime soon.

[disneysteve]

Originally Posted by Broken Arrow

Neither company seems like it's going to be on a good sale anytime soon.

I agree. As I kind of suspected, people aren't going to abandon Toyota just because of the gas pedal thing or the Prius thing. It is still a great company that makes great cars (I've got 2 of them) and will continue to do so. This is just a little speed bump along the way.

[Beppington]

Originally Posted by elessar78

Just curious if a major recall like this would affect a car company with Toyota's reputation for reliability in the long long run?

I doubt many can predict this. After all, how many people that experienced a Honda CVCC in the 70's could've predicted they'd be making the quality cars they are today? Can you say "rust bucket"?!!

[elessar78]

Seems like Toyota is going to take a huge PR hit. I read in the Washington Post today that investigators have found dishonesty and cover ups in terms of the extent of the purpose of the recall. I think someone mentioned it already on this thread, but what wasn't said that was that Toyota was being sneaky about it.

If so, this is going to be another one of those cases where the cover up actually worsens the effect than just out right admitting the mistake(s). Even sadder in this case, because Toyota had such a sterling reputation and brand recognition.

In the bigger picture, it's a bad time for this to come out because of a resurgent Ford Motor Co., who seems to be making better and better cars (the new Taurus and Fusion recently caught my eye) and have been getting good reviews.

[cptacek]

The head of Toyota will be going before the board of directors of another car company to answer questions about his company, and those board of directors have the power to fine him, arrest him, deport him or put him in prison. Of course, I am talking about Congress and GM.

Does anyone else think that is a very bad idea?

[EmmersonBiggins]

I read today that the recall issue may cost Toyota as much as $5.5 billion.

Toyota has about 1.57 billion shares outstanding.

Call it $10 billion very bad hell-in-a-handbasket worst case.

That's about $6.37 per share drop.

Any drops further than that from the pre-recall share prices would be either 1) due to poor financial performance or
2) overreaction to the recall news

Toyota's been trading in the 70's for much of the past 12 months, so I don't think it would hit the low 60's because of this at all.

[disneysteve]

Big story on the news today about a Prius gas pedal getting stuck on the highway. The guy was over 90mph and a cop was able to get in front of him and bring the car to a stop. That won't help matters with Toyota.

Beppington, you are so right about the older cars. Hyundai is the same way. The product they sell today is 1,000 times better than what they sold 20 years ago.

[GrimJack]

The interesting part of the Prius story is that the driver could not put the car in neutral nor turn the engine off. He had to get the car's speed down below 55 before the car could be turned off. It makes sense in that turning the car cuts all the power assist (like brakes and steering) but it implies an interlock (correct term??) between computer and all the different functions that may point back to the previous problems that had been blamed on faulty pedals and/or poor carpeting.

Toyota cars have the equivalent of a black box that records various statuses (stati?) before and after a crash but the company makes odd claims about what is and is not recorded. The data may be subpoenaed in the near future. I don't know what to think about the company any more - I owned and loved a Corolla Al-trac for 18 years.

[EmmersonBiggins]

Jack, I find it incredibly fishy that the guy simply didn't shift the car into neutral. I don't own a Prius, but I tried it in my wife's FJ Cruiser. You get to reduce speed and keep power brakes & steering. I guess some people just don't have much common sense (unless of course you can't shift a prius into neutral while driving).

[poundwise]

Originally Posted by GrimJack

The interesting part of the Prius story is that the driver could not... turn the engine off. He had to get the car's speed down below 55 before the car could be turned off.

The driver did not know how to cut the push-button ignition off when the car was engaged. There is a certain procedure for this on cars with this type of ignition, though it is not standardized.

For a Toyota, you press and hold the button for three seconds. He was likely frantically pushing it over and over, which would do nothing. It seems that Mazda thought about this and the remedy in a similar situation with a Mazda is to press the button three times in succession.


ETA: The proper procedure, when faced with this situation, is to shift into neutral (the engine will rev but the car will slow) and then use the steering and brakes to guide the car and stop before turning off the ignition. (Source: Edmunds.com VIDEO)

[Penny Pincher]

Originally Posted by Broken Arrow

I thought this is such a great opportunity that I even blogged about it.

When it comes down to it, Toyota is still committed towards safety, fuel efficiency, and affordability. Those tenets haven't changed, and if anything, this recall only illustrates such a commitment.

What they're facing is an issue that can be readily fixed and requires no major changes within vehicle design and assembly, or the corporate infrastructure for that matter that we've had to see in American automakers.

Some are worried about the retracted words from the US Transportation secretary, the ensuing government hearings, or even tomorrow's earnings report (which by the way, posted improved financial outlook even though that tidbit is being eclipsed by the safety recall). Why? Negative press is exactly the kind of thing traders who are looking for a dip wants! Especially if it doesn't jive with the company fundamentals and the problems at hand.

Look, here's the thing: People are worried because it's a serious safety issue. And people have every right to be. However, that's a SAFETY issue, not a STOCK VALUATION issue. The company is still fundamentally sound. It still has a great balance sheet and a great product line. Toyota will fix this problem, and I'll be surprised if a year or two from now, we'll even remember talking about it.

I could certainly be wrong about all this, but... I'm not just talking about it. I do plan on putting my own money on the line as well. I'm just going to buy some, sit on it, and enjoy the 1.29% dividend while I ride this storm out.

However, I can guarantee you this: Toyota is going to come out of this with stronger, better products than ever. (I also wouldn't be surprised if they no longer do business with the outside contractor who made the pedal. Yes. Toyota didn't actually make the pedal, but they're taking the heat for it.)

As Warren Buffett once said, "Be greedy when others are fearful. Be fearful when others are greedy."

Buffet with worth learning from. But you need to understand why others are fearful of Toyota stock. I expect things will get worse there long before they get better. Would you buy a Toyota car right now? If so the stock might be for you too.

[GrimJack]

Well, lookie what I found on The Gawker.

Thanks, poundwise, but if you are going to quote me to make your point you should understand my point first.

[elessar78]

As this Toyota thing unravels, do people still think the company has good long-term prospects? The stock price has really yet to dip. It seems to be holding strong despite the negative press.

[disneysteve]

Originally Posted by elessar78

As this Toyota thing unravels, do people still think the company has good long-term prospects?

I certainly do. I see no reason to think that the gas pedal thing will have a long-term impact on the company. They'll fix the problem and move on.

[elessar78]

I feel the same way but I have to ask. Since 1988 my family (parents, siblings) have exclusively bought Toyotas, so I'm biased toward their quality.

[Andrew Jackson]

From an article in the LA Times:

Graduate student Chaviva Edwards, 26, who had checked out financing offers from other automakers, said she was now seriously considering the Toyota Yaris. With lawmakers and the media trained on the company's every move, she believes Toyota will sell only the best cars available.

"The deals Toyota is putting out there are pretty tantalizing," said Edwards, who lives in Storrs, Conn.

In a rare move, Toyota last week began offering no-interest financing for 60-month loans and $1,000 cash back on some models. Sales of Toyota vehicles slumped nearly 9% in February after the automaker issued nearly 6 million recall notices in the U.S. to address sudden-acceleration problems.

I searched for this after I heard a commercial today where some of the local Toyota dealers around where I live were promoting the 60 month no-interest financing. I've always liked Toyota's, well basically just the Tacoma because a mans got to have his truck, but they have always been out of my price range. Maybe now I can finally afford one? Says the deal is only good on some of the models though.

[elessar78]

It's a good way to get in one, but whether or not it's a good buy is another question. It's still a new car and the depreciation is what kills you, not the 5–7% over 60 months.

I'd say, average price for a 2011 Camry right now is $25,000. With a 6% rate over 60 months you end up paying about $33,500 for it, but instead you can save $8500.

But 2010 Camry's (with low miles) are going for about $15K right now. Even with a 60 month loan at 7%, that's still only $21K.

[markusk]

Originally Posted by disneysteve

Big story on the news today about a Prius gas pedal getting stuck on the highway. The guy was over 90mph and a cop was able to get in front of him and bring the car to a stop. That won't help matters with Toyota.

When I first heard excerpts of the 911 operator and the driver (on the evening news), I thought it odd that the 911 operation kept telling him to shift the gear to neutral and the guy kept talking about how fast he was going and that the breaks are not working, over and over again -- either he would not or did not want to put the car into neutral.

We own a Camry and a Prius and it is quite easy to shift into neutral. We've even practiced it on the road a few times, just in case.

Tonight, there was a follow up news report on NBC, on the guy in the San Diego Prius story -- that basically something in his story was not credible.