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Discussion Starter #1
Falls under timing the market of course...reading a lot about Toyota, stock down 15% An over-reaction to a common - but uncommon for them - event?

I do think it's an over-reaction but the price hasn't fallen enough to justify it being a 'new coke' moment for me. ..what are people's thoughts on this?
 

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Toyota quality has been slipping for a while now. I doubt the "trend is your friend" on this one. However, after a noticeable drop a recovery bounce is always a possibility. In other words a possible trade, but not a hold.
 

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Toyota has a big problem right now with the sticky accelerator problem and some of their best models are being recalled.
 

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I don't think you can call this a 'new coke moment'. Coke did that intentionally, but Toyota sure didn't plan this.

As for stock price, it will fall further because the whole story isn't out yet. They have been called to testify in front of the US Senate in February. There has been media coverage that they first heard about the sudden acceleration in 2004, but blamed it on floormats. This despite people reporting they either took out the floormats or did not have the recalled floormat and still suffered the sudden acceleration. I anticipate a 30% loss in stock price before it bottoms out.

I think this will be worse for Toyota than the Ford/Firestone recall was for Ford. And recall that that was the beginning of the end for Jac Nasser. Toyota will be facing multiple lawsuits for the fatalities. This will be in the news for the next three years.
 

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I recently rented and drove a new Yaris for a 3 hr. commute to a remote customer for a week.
This was my first Toyota ride (at least in the last 8 years).
The accelerator was so close to the side carpter/matting that I was finding it hard to "feel" the accelerator.
Often I would be pressing down only to realize that my foot is simply scraping the carpet and not the accelerator.
The first day I considered returning the car and renting another because this design is a serious risk.
After the second day, I figured out that my angling my right foot in a certain manner I could reliably operate the accelerator without scraping against the floor carpet.
Very inconvenient and dangerous design.
So much for Japanese engineering...the guys who built the car obviously never drive it.
Contrast that with the Ford, GM, Chrystler who employees drive the same car they build all their life.
 

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Toyota cover there quality issues by announcing it late on Fri. afternoons the day before long weekends for really big things there bail out money was announced the last business before Christmas.

My guess is they were forced into this by some gov. agency and the best way to cover it up is make it look voluntary.
 

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Discussion Starter #8
I should clarify my 'new coke' comment. I meant to refer to Buffet purchasing Coke stock soon after their introduction of & and fiasco of New Coke. Assuming it just was luck, I believe Buffet realized that this issue would not hurt the long-term profitability of Coke and the stock was unfairly valued.

I do believe in Toyota as a company (or Honda). I'm trying to figure out a fair value for the stock - this recent price drop is interesting and I think,long term, unwarranted.

HaroldCrump - since you had a Yaris, I suspect you really were pushing on the pedal and it was just going as fast as a Yaris went :)
 

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out of curiousity, i checked on gurufocus.com to see if any guru's were holding TM long-term, turns out only 2 guru's holding with tiny portions...
 

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I recently rented and drove a new Yaris for a 3 hr. commute to a remote customer for a week.
This was my first Toyota ride (at least in the last 8 years).
The accelerator was so close to the side carpter/matting that I was finding it hard to "feel" the accelerator.
Often I would be pressing down only to realize that my foot is simply scraping the carpet and not the accelerator.
The first day I considered returning the car and renting another because this design is a serious risk.
After the second day, I figured out that my angling my right foot in a certain manner I could reliably operate the accelerator without scraping against the floor carpet.
Very inconvenient and dangerous design.
So much for Japanese engineering...the guys who built the car obviously never drive it.
Contrast that with the Ford, GM, Chrystler who employees drive the same car they build all their life.
May be Japanese engineering, but those pedals were made right here in Canada. :eek:
 

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So with the power steering issue on the latest models, to me this is is sounding more and more like a conspiracy.
I mean what were the chances that the world's largest auto maker with a stellar record of reliability would have so many problems show up within such a short period of time?
Toyota seems to be the Tiger Woods of the auto industry right now.
This is looking more and more like a conspiracy either by a regional competitor (Honda, Hyundai) or an even more sinister conspiracy by the US Govt. in association with American manufacturers (GM, Chrystler).
I personally have never owned a Toyota and don't even like them actually, but I do feel sorry for them.
If Toyota has such issues, it is possible that other manufacturers have similar issue - they just aren't being exposed yet (hence the conspiracy theory).
 

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Yup corporate media at work..

GM vehicles have had brutal transmission issues they wouldn't admit to etc that didn't get this kind of attention

It's interesting how the media can shine their light on something, and suddenly uncover more and more to keep the story going

If they chose not to shine their light on it, then it didn't happen
 

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If Toyota has such issues, it is possible that other manufacturers have similar issue - they just aren't being exposed yet (hence the conspiracy theory).
Honda just had a big recall too. Still, these recalls are nothing compared with what's normal with the U.S. auto manufacturers. I had a Ford Focus for a few years, and it had 13 recalls during that time. I felt like that car spent more time in the dealer's garage than it did in my driveway!

I do think that if you're into buying individual stocks, this is probably the time to buy Toyota. They will repair their reputation; they really are serious about quality control and they have the corporate culture and determination to recover from this.
 

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Discussion Starter #16
Harold/High_Octane - suspect we're cross-posting with the conspiracies ;)

I do believe that since the USG does own a significant portion of GM they are in competition with Toyota. One of the best ways of knocking down their competition is trashing their brand - I do believe that is some of it.

However, it does appear the Toyota does have some cultural issues to deal with - they might be suffering from victory-disease that affects all #1 companies eventually. I do believe that they will fix it over the next 12 - 18 months and am still considering purchasing some Toyota.

All - thanks for the opinions!
 

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I don't really have any opinion on Toyota, but I do have a general opinion on automobile manufacturers: like airlines, I refuse to buy them in my portfolio.

The reason for this stems primarily from the fact that these companies are extremely complicated. Consider that General Motors is the world's largest computer manufacturer; sources parts from around the world in a delicate balancing act of trans-national, oceanic shipments; produces products across a range of highly "roboticized" plants; and delivers finished products to a complex dealer network around the world. Some car companies operate massive financing facilities as well. Plus, they're subject to intense scrutiny and law, from the perspective of both customer safety and environmental regulations.

These types of companies are so massive that it's hard for me to wrap my head around the "proper" valuation of each of the individual subcomponents. I also have a difficult time estimating the risk of each of the different components. I suppose that I'm more of a "bricks & mortar" type investor, investing in companies that do one or two things really well, and for which I have a good understanding. This has worked quite well for me thus far.
 

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These types of companies are so massive that it's hard for me to wrap my head around the "proper" valuation of each of the individual subcomponents.
Someone on this forum (maybe it was you) pointed out that instead of investing in the large, complex manufacturer, it might make more sense to invest in the suppliers who make the components. I think the example in this case was computers: instead of investing in, say, Apple or Dell, it would make more sense to invest in the companies that make the chips and other components used in their computers.

That assumes, of course, that suppliers have a secure contract, which of course is not always the case. If I had bought stock in Motorola back when they were making all the chips for Apple computers, I would have lost a lot of money when Apple switched to Intel (and I would have lost even more when Motorola's cellphone division lost its brief shine). But if I had invested directly in Apple itself back then, I'd be pretty happy today.
 

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DrV is right the capital spend is staggering just to produce 1 model without 1 cent return until the first unit roles off the line then you have 3-5 year run with constant updates to keep fresh.

I made a living in auto manufacturing never invested 1 cent.
 

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I don't really have any opinion on Toyota, but I do have a general opinion on automobile manufacturers: like airlines, I refuse to buy them in my portfolio.
Most stocks are still complicated to me

I bought TM on Feb 4, based on it being beat up so badly for what seemed to me as media induced exaggeration

I'm hoping to sell at $80 or so within a year
 
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