Thursday, February 4, 2010

Are Ford and Toyota Going in Opposite Directions?

Toyota Motor Company has been all over the news lately for certainly dubious reasons. With all of its problems with accelerators, brakes, and whatnot, the company has suffered a blow. Naturally, it will take more than this for one of the heavy-weights of the "reliable car industry" to topple. Consumer confidence may be a bit shaken, and it certainly didn't help that Transportation Secretary Ray Lahood told everyone, "My advice is if anybody owns one of these vehicles, stop driving it. And take it to a Toyota dealer." Ouch, and that's exactly what Toyota's stock price was saying, dropping more than 8 points in 3 days.

On the other side of the road, no pun intended, we have Ford. It posted its first full-year profit since 2005. They reported earnings of $2.7 billion. So, is Ford moving up in the world and Toyota headed down. Not exactly. It would be foolish to write off both events (Toyota's recall and Ford's earnings), as completely inconsequential in the short run, and we will certainly see this evidence in the stock market. However, as I said before, Toyota is not about lose its place among the most reliable car-makers. As for Ford, they did well, beating industry expectations. The bad news? From "JP Morgan analyst Himanshu Patel said that although Ford's adjusted results were stronger than he had expected, the gain 'was entirely driven by volatile financial services profits.' Patel said in a note for clients that a lease-related gain in the quarter from Ford Motor Credit Co was driven by gains in used-car values that would prove 'unsustainable.'" So, the jig isn't up for Toyota, and Ford needs put in a concerted effort to take advantage of Toyota's situation. It will be interesting to see how this plays out in 2010.

1 comment:

  1. Isn't it ironic that Ford did not get any bailout money and seems to be turning the corner.