RichardJensen

Shareholder equity or capital is essentially Assets - Liabilities; any difference between equity per share and price per share is pure blue sky. It is of no value to the company, unless they issue more stock at that price, in which case they can expand their cash and shareholder equity simultaneously. ...

More musing: Toyota's income for FY 2005 (in yen): 1,171,260,000,000 Toyota's cash on hand at the end of FY 2005: 1,483,753,000,000 Now, I don't know much about the way Japanese companies obtain financing and pay obligations, but that's a pretty scary figure. Toyota's cash on hand is only slightly higher than a year's profit. I can tell you that if Ford were sitting on only $3B cash, they'd be in a world of hurt. Moreover, Toyota's means of presenting financial data is (IMO) purposefully confusing and non-standard. But, like I said, Toyota's cash on hand looks a pretty small pile for running the soon to be largest car company on the planet. Not that you'd see any concern about that here. Just like with Enron, the bulk of the financial press will swallow a glowing press report and lots of sunshine and smiles, as long as the earnings keep going up. Seemingly no one is interested in finding out how strong Toyota really is, and how much this drive to become the biggest is really costing them. ...

RSB: That Washington Post article was bumf. Print it off and keep it handy in the bathroom in case you run out of Charmin. Under no circumstances should you assume that it contains a correct assessment of what Ford has done wrong and what Toyota has done right. Also, OAC is exactly right. Ford's troubles are widely known. Toyota's... are being swept under the rug. For now. They have been steadily increasing incentives and fleet volume in this country over the past few years, and they seem to consider themselves immune to any negative market forces--including the loss of differentiation on a key selling point for them: quality. Toyota should be redoubling their efforts to build better cars and trucks for the NA market, but it's just at this time that they have distracted themselves with other concerns. ...

Figured it would be worth it to take a look at Toyota's financials from the first half of their fiscal '06 (Apr-Sept '05). There's some interesting stuff in there. For the first half of this year: Revenue is up 10.3% Unit sales are up 9.7% Operating income is down 6.6% Net income is down 2.3% Their gross margin fell 15.6%; where it was 9.9% in the first quarter of fiscal 2005, it was 8.1% at the end of the most recently completed quarter (which is closer to a 20% drop). It was as low as 7.8% in Q4 of Fiscal '05. This is not a sustainable situation for Toyota. It is also a fairly new one for them. Smelling weakness at GM (Russia), they have decided to invade. The full extent of this folly has not revealed itself yet. Since Toyota has publicly and repeatedly committed themselves to this strategically pointless "we're number 1" program, it will be very difficult for them to pull back from what appears to be a very messy battle of attrition that is already taking its toll on them. Thing is, GM will be able to get loan guarantees from the U.S.; they will get a measure of protection, they will get enough protection because bottom line the country is better off with GM in business, instead of in receivership. And rhetoric aside, the Congress and the President will act more or less rationally, knowing that rust belt states will decide the next election. So Toyota overextends itself in a bid to drive GM into bankruptcy; but proves unable to do so. Key to their current strategy is keeping Ford and GM at bay. Government intervention, especially for GM, is quite dangerous to them, because it provides space, breathing room, the refreshment of a nice hard Russian winter. Toyota is very much out of their depth here, they have tried to achieve all at once that which would've been theirs in time. Had they been patient. However, people are by nature impatient, and even more so are leaders that have accomplished much, and want to accomplish more, instead of leaving it to their successors. The cost to them will be nothing less than their soul. There is no gradual draw back from this program without loss of face, and the company has a breed of executives now that are experienced in handling everything except failure. Sony embarked on a similarly ambitious campaign to become both purveyor of technology and content with disastrous results. With Sony the mistake was gluttony--too many acquisitions. With Toyota it is more akin to cancer. Uncontrolled growth. ...

Well, and there you go. Straight from the horse's a... er umm, mouth. ...

That's a good question. I have absolutely know idea how tires arrive at assembly plants. I would assume that they arrive on the wheels. So, it could be that the tires are fitted to the wheels by outside suppliers.. However, it seems most likely that the proper recourse remains the tire company (who, after all, is the one who warrants that the tires and valve stems are free from defect). The tire company would then be the company to either eat the cost or subrogate. ...

Market cap is malarkey, for the most part. To the extent that it deviates from shareholder equity, it is nothing but bluesky and sailboat fuel. Market cap is no measure of a company's worth. But, more to the point, I am not saying that Toyota is going to collapse Enron style. However consider this: Revenue is increasing, but revenue and profit per unit are decreasing, and this has continued for about 3-4 years non stop. Moreover, in order to control costs, Toyota budgeted NO increase in R&D in a fiercely competitive industry for FY 2005. Their failure to adhere to that unrealistic budget estimate resulted in costs outstripping revenue growth for the first time in years, and I would guess that sky-high energy and materials costs this year will result in revenue growth being outstripped by cost growth again. So this is the picture you've got. Cost growth > Unit growth > Revenue growth > Profit growth. That is not a sustainable model. I don't care if you're Toyota or a street corner hot dog vendor, you CANNOT sustain growth like that. ...

This would probably not be covered under their warranties either, but under the tire warranty as was previously stated.

I agree with what you said about copying the tactics used by Toyota and Honda; however, stifling arrogance (which one encounters most often from Toyota execs) is not something that Ford should copy. Ford needs to radically simplify the total part count; sharing as many components as possible, and carrying over as much componentry from one generation to another as possible (Hondas have had the same basic signal/headlight switch stalk for geez must be 20 years at least now, if not longer). I wholeheartedly support that, that and regular consistent, visible upgrades. However, Toyota is pushing to be number one. In a very real sense they have taken their eye off the ball. Their focus is not on building better cars (they assume they have a lock on that), it's on selling more cars than anyone else. NOTE: This is not an attitude I see at Honda. The new Civic while being tragically styled in the way so many Hondas have been since 2003, is worlds better than the old Civic. Anyway, Toyota wants to be number one, and in order to do so they have pushed themselves (IMO) beyond a certain margin of error in emerging markets. Increase in costs up until very recently have been kept under increases in revenue; however last year in order to keep costs under control, they budgeted not a cent in additional R&D over the year earlier. This was utter foolishness. Moreover, revenue has not grown as fast as unit sales, and on the whole, Toyota's profit per unit has trended downwards. They are desperately in need of keeping American customers happy; yet it is apparent that they are beginning to take these same customers for granted. American customers are financing Toyota's push to be the world's largest car maker. ...

"this f-150 is just to big for me" How do you like the size of the Explorer? I think the Explorer (with a simpler and cheaper frame past the firewall) gives a good indication of where the Ranger's headed. Wider, a little longer and with a little more living space inside. Probably not with a V8, though. Heck. The Ranger's payload and tow rating are, I think, better than all but Dodge, with stiffer sturdier Explorer frame and a new transmission, I think the Ranger could continue to be a class leader among 4s and 6s. ...

Not that simple. Nothing is. If people are buying Toyotas because they perceive them as having better quality, and are willing to endure appaling sales and service to get that higher quality product, that's fine. But what happens when Toyota quality is no longer perceived as being worth the price premium and the high-pressure sales tactics and snide service department staff? And don't think it won't happen. According to CU, initial defects in American cars have fallen by 50% over the past five years, more or less achieving parity (on an average basis) with Japanese cars. There are caveats to that: of course, not all Japanese or American companies are equal, and numbers from Japan may be skewed downward by increased sales of lower quality Japanese products (Mazda and Nissan). However, the point bears repeating: Japan is steadily losing its quality advantage, as is Toyota. When customers see no reason to endure nasty sales tactics and high prices, they'll go elsewhere. It's an American tradition that Toyota has no control over. ...

Well, then buy Mopar, it's a free country. But that Hemi engine is not a cureall; it is just b a r e l y legal under today's emissions standards. Any belt tightening and its performance advantage will be gone. Not quite as bad as the 70s big blocks that were suffocating under their smog equipment, but the Hemi really isn't tomorrow's engine. It's today's. Where the industry is headed in the next five-ten years is toward California's SULEV II standards, at present only Ford makes V6s that meet this standard, and Ford sells more PZEVs than any other company (a PZEV is a SULEVII engine with a zero evaporative loss fuel system and a long warranty on that system and engine). What I'm trying to say is that DCX's Hemi is not necessarily a flash-in-the-pan, but it is an engine with a short lifespan. Also worth noting is that if Ford was selling the 300, they would still be losing marketshare because they sell far more trucks and SUVs as a percentage of overall volume. If Ford was selling the 300C, and continuing to lose marketshare, you'd still have vultures circling overhead, and the 300 would be deemed a failure. ...

And your point is......?

Geez. I coulda swore this F150 was the most popular model ever. And that Ford's share of the fullsize truck market has been rock steady despite the introduction of the Titan and Tundra. Trust me, the Tundra has terrrrrrible brakes. They will no doubt be better on the next model, but the next model will no doubt also have the steep sides that the F150 does. Monkey see, monkey do is the Toyota approach to trucks (not the Japanese approach, mind you--I'm not trying to feed cultural stereotypes here--but the Toyota approach). Scuttlebutt has it that the '08 refresh of the F150 will include weight saving measures. As far as the lack of power, blame that on the too-tall first gear ratio. If you've got the 5.4L there's plenty of power on tap, it's just not geared to be felt in your backside. The standard F150 and Titan have similar final drive ratios (3.55 on the F150, 3.357 on the Titan); however, 1st gear on the F150 is 2.84:1 and 3.82:1 on the Titan. That's a big enough difference to make the F150 feel pretty weak off the line. The Titan also has a 5 speed automatic while the F150 still makes do with a 4 speed auto. Likely the forthcoming 6-speed on the F150 will address some of the perceived lack of power. Anyhoo, the Fusion is, in my mind, more competitive vis a vis the Camry than the Tundra is with the F150. How much of the gap Toyota closes with the next Tundra remains to be seen. However, I have my doubts about the desire of Toyota as a corporation; I have doubts about their will to succeed in this arena. Ford wants, no needs, to succeed in the midsize arena in order to survive. Toyota does not need the fullsize truck sales the way Ford needs the midsize sedan sales. I 'spect the next Tundra will be a creditable alternative to today's F150 in a few respects, but those advantages will be largely neutralized by improvements coming on the '08 F150. Just my opinion. ...

I would like to see Ford organically grow the Ford Credit side of the business, so that the overall company is not as dependent on the manufacturing side for profit. They should always be a car company, but they shouldn't shy away from other lucrative businesses; the automotive sector is far to cyclical in nature for any company to be healthy carrying the fixed costs that Ford carries in the U.S., and in Europe. ...

It will be impossible for the Fusion to come close to the Accord and/or Camry in sales numbers. Ford doesn't have the capacity to build 380k Fusions. Furthermore, the idea that a car brand spankin' new on the market will sell 300k units+ is laughable. Additionally, the most troublefree new fullsize is the Five Hundred, and the most troublefree new coupe is the Mustang. BTW, an '04 Tundra would've been in the shop a few times by now, their brake rotors suck. ...

Uh. What? Ford goes from like mayyyyyyybe 60-70k units of retail (with the Taurus) in the midsize sedan market to oh about 150k units with the Fusion, and you think Toyota is going to be celebrating? Where do you think that volume (and the volume from the Sonata) is going to come from? It's going to come from the biggest players in the market. Unlike Toyota, Ford isn't subsidizing ambitious expansion plans with profits from increasingly undifferentiated models in this country. Or, in case you haven't seen what happened to Sony in the 90s, the Japanese are not immune to arrogant miscalculations. ...

http://www.jdpower.com/news/releases/press....asp?ID=2005227 Notice that the difference between Ford and Toyota represents 24% of the difference between the top and bottom finishers in the ranking (excluding Isuzu). ...

I think for the first time in a long time Ford beat Toyota to the punch. The article says that the Camry is getting AWD in Japan. Wonder why not here. The '07 Camry looks to offer nothing too compelling over the '06 Fusion. Maybe better fit and finish. Maybe. Toyota has done an abysmal job pushing the envelope in the states. They're taking this market largely for granted, and diverting resources into emerging market countries. Instead of doing real work to improve the Camry and Tundra, they've just pulled ahead the launch date of one, and moved production of the other to Texas. That's not "moving forward" that's treading water. ...

What's that line from "Badlands" by the Boss? Poor men wanna be rich / Rich men wanna be kings / and a king ain't satisfied / till he's rulin' everything. Toyota's push to be the world's largest automaker has many precedents in many other industries, and in history--unfortunately for Toyota, few of them have happy endings. Napoleon invaded Russia for reasons that are not readily apparent, and Hitler did the same. Toyota's quest to be the world's largest auto maker is a quest driven largely by ego. Since they began their push into emerging markets (which is where a lot of their growth is coming from), they have seen expenses grow faster than revenue, and they took the drastic step two years ago of budgeting no additional money for R&D, in an effort to reduce costs. And their quality has not improved as quckly as the quality of their rivals. For instance, domestic IQ as reported by CU is twice as good as it was five years ago. Regarding the recall: well, that's life. One might point to the scope creep of the Toyota oil sludge problem, the Prius stalling problem or the Honda transmission problem (both of which were initially acknowledged by the manufacturers in only a small percentage of instances). ...

Lemon: I'd refrain from responding in that tone to MyBlueOval in the future. I've told you not to provoke other members. ...