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Buy Toyota When There is Blood in the Streets
Nearly 40 years ago I was starving in Japan, living on fish heads and rice, while waiting for the financial journalism thing to start paying off. SoI took a weekend job in Hakone to teach managers at Toyota Motors (TM) how to speak English. As we approached the hotel I saw a dozen men lined up out front wearing cheap suits, white shirts, and conservative ties. Each one took turns picking up a baseball bat and beating the daylights out of a severely shredded dummy on the ground before them, screaming a maniacal samurai scream. I asked my driver what the hell was going on, thinking perhaps that a serial killer had gotten loose. He deadpanned: “They’re beating the competition.”
This was back when Toyota made laughably tiny cars that looked like a giant ostrich eggs on wheels and had to get a running start to get up a freeway onramp. By 2006, the company had seized 18% of the US car market, and GM and Chrysler were wearing a toe tags. Toyota turned out to be a serial killer of American car companies.
Today Toyota, the world’s largest car maker, has been slammed by the perfect storm that has taken its share down to 14.7%. They took eight years to find a defect in an American made accelerator component that caused thousands of accidents, and dozens of deaths, forcing a worldwide recall of 9 million vehicles. Unsurprisingly, the ADR’s here plunged 17% in a heartbeat, to $73.
To me, this all adds up to a “BUY.” You can start with the recall, the largest in history, covering eight models, which promises to be speedy, lavish and generous. It prompted a production shut down, an unprecedented measure in auto history. The company is going all out to reinforce customer loyalty. Toyota still makes great cars. It has not turned into GM overnight. And let’s face it, many people would rather die than drive an American car, this author included.
It’s usually a great idea to buy when there is blood in the streets, and in the auto industry it doesn’t get any gorier than this. I know the management, the philosophy, and the strengths of this company intimately, and they will come roaring back. Take advantage of the rare discount and buy a Prius before gasoline prices spike up again. Let the ruckus over the recall burn out, and add Toyota to your “buy on dips” list. And for heaven’s sake don’t short it.
Remember what happened to that dummy. Ouch!
For more iconoclastic and out of consensus analysis, you can always visit me at www.madhedgefundtrader.com , where the conventional wisdom is mercilessly flailed and tortured daily. You can also listen to Hedge Fund Radio at http://www.madhedgefundtrader.biz/
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however i'm no fool. ive got the greatest car of all times.
http://www.youtube.com/watch?v=J5yoKzatUkI
Good looking vehicle. My mailman has one too and he never seems to break down.
e-type jag, beautiful, truly beautiful.
Madhedgefund,
Did the Japanese Government nurture Toyota, a maker of sewing machines, in the form of subsidies by MITI(Ministry of International Trade and Industry)?
Did this have anything to do with their success?
has the financial journalism started paying off yet?