Released December 24, 2008 | SUGAR LAND
en
Researched by Industrial Info Resources (Sugar Land, Texas)--In recent months the American automakers faced intense scrutiny as they begged Congress and the Bush administration for billions of taxpayer dollars to save themselves from, essentially, themselves. While they did eventually receive a temporary reprieve, saving at least one of the Detroit-Three from bankruptcy for at least a few months, foreign automakers have also been facing troubling times within the North American automotive sector. In recent weeks Toyota Motor Corporation (NYSE:TM) (Toyota City, Japan) and its North American arm, Toyota Motor Manufacturing North America (Torrance, California), have been facing problems of their own.
On December 15, Toyota announced it would be halting construction of the $1.3 billion grassroot assembly plant in Blue Springs, Mississippi. The plant, which will eventually assemble the Prius hybrid automobile, will be placed on hold indefinitely while the automaker attempts to get a better handle on the slumping automotive market, the weak U.S. economy and the availability of credit for financing facing all automakers.
The Mississippi plant, which had originally been designed to assemble Highlander SUVs, was scheduled to begin operation in late 2009 or early 2010. However, as automotive sales began to slump and gas prices continued to rise earlier this summer, Toyota switched the plant from manufacturing the Highlander to the Prius and pushed back the planned opening until a mid-2010 timeframe. As the market continued to decline, the automaker pushed the project's completion even farther back and has now placed the entire project on hold indefinitely.
Toyota has also announced that it will be facing the first operational loss in 70 years when the company's fiscal year ends in March. Toyota is anticipating an operating loss of $1.66 billion for 2008. In 2007, the automaker showed an operating profit of $25.2 billion. Toyota still expects, however, to post a small net profit of $555 million when all is said and done.
Toyota had been going through a period of rapid and expansive growth in recent years as more fuel-efficient car models were in high demand and gas prices remained high. However, with the collapse of Wall Street and the disappearance of available credit to potential buyers, the company has been forced to change its financial outlook and production forecasts a number of times this year.
Toyota and other foreign automakers have been keeping a close eye on the plight of the Detroit-Three as a total collapse of those automakers would also harm the foreign automakers. Foreign automakers, such as Toyota, share many of the same tier suppliers with the Detroit-Three. If any of the American automakers end up going under (the odds of which are very good), the effect on the foreign automakers could be devastating. While Toyota and the other foreign automakers are doing everything they can to mitigate the potential effects of a U.S. automaker failure, there is only so much they can do to address the problem before it actually occurs.
Overall, Toyota is still in a position of power within the automotive sector, especially in the U.S. They manufacture vehicles that consumers want to purchase and that are more fuel-efficient. While the failure of an American automaker would temporarily harm Toyota, the hurt would be just that--temporary. The dust will settle, and Toyota will find a way to continue to produce vehicles. While profits and production estimates are down for now, they will rebound once the economy recovers. For now, Toyota is doing its best to weather the storm that is the automotive sector within the U.S., and to date, the company has done a pretty fair job.
View Plant Profile - 1072272
View Project Report - 03002945 03002856
Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.
On December 15, Toyota announced it would be halting construction of the $1.3 billion grassroot assembly plant in Blue Springs, Mississippi. The plant, which will eventually assemble the Prius hybrid automobile, will be placed on hold indefinitely while the automaker attempts to get a better handle on the slumping automotive market, the weak U.S. economy and the availability of credit for financing facing all automakers. The Mississippi plant, which had originally been designed to assemble Highlander SUVs, was scheduled to begin operation in late 2009 or early 2010. However, as automotive sales began to slump and gas prices continued to rise earlier this summer, Toyota switched the plant from manufacturing the Highlander to the Prius and pushed back the planned opening until a mid-2010 timeframe. As the market continued to decline, the automaker pushed the project's completion even farther back and has now placed the entire project on hold indefinitely.
Toyota has also announced that it will be facing the first operational loss in 70 years when the company's fiscal year ends in March. Toyota is anticipating an operating loss of $1.66 billion for 2008. In 2007, the automaker showed an operating profit of $25.2 billion. Toyota still expects, however, to post a small net profit of $555 million when all is said and done.
Toyota had been going through a period of rapid and expansive growth in recent years as more fuel-efficient car models were in high demand and gas prices remained high. However, with the collapse of Wall Street and the disappearance of available credit to potential buyers, the company has been forced to change its financial outlook and production forecasts a number of times this year.
Toyota and other foreign automakers have been keeping a close eye on the plight of the Detroit-Three as a total collapse of those automakers would also harm the foreign automakers. Foreign automakers, such as Toyota, share many of the same tier suppliers with the Detroit-Three. If any of the American automakers end up going under (the odds of which are very good), the effect on the foreign automakers could be devastating. While Toyota and the other foreign automakers are doing everything they can to mitigate the potential effects of a U.S. automaker failure, there is only so much they can do to address the problem before it actually occurs.
Overall, Toyota is still in a position of power within the automotive sector, especially in the U.S. They manufacture vehicles that consumers want to purchase and that are more fuel-efficient. While the failure of an American automaker would temporarily harm Toyota, the hurt would be just that--temporary. The dust will settle, and Toyota will find a way to continue to produce vehicles. While profits and production estimates are down for now, they will rebound once the economy recovers. For now, Toyota is doing its best to weather the storm that is the automotive sector within the U.S., and to date, the company has done a pretty fair job.
View Plant Profile - 1072272
View Project Report - 03002945 03002856
Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.
