Toyota Offloads Financial Arm

Toyota Motor (TM) plans to sell its entire stake in Toyota Financial Services Securities Corp. to Tokai Tokyo Financial Holdings in January next year. This will enable the company to focus solely on its automobile operations. Ahead of the stock sale, the brokerage unit will acquire a stake of about 5% in Tokai Tokyo Financial in October this year.

Toyota has been battered financially by the economic crisis. The company posted its first annual loss (¥437 billion or $4.4 billion) since 1950 for the fiscal year ended March 2009. Further, management has recently projected net loss to worsen to ¥550 billion ($5.5 billion) for the fiscal year ending March 2010.

However, the recently ended Cash for Clunkers program strengthened demand for Toyota’s fuel-efficient vehicles in the U.S. The federal government program launched in late July allowed consumers to trade in their old gas-guzzling cars and trucks with a mileage of 18 miles per gallon or less for a value of up to $3,500–$4,500.

Toyota ruled the roost in Clunkers program, featuring as many as 3 models among the top 10 buys under the program. These are the Toyota Corolla (ranked first), Toyota Camry (ranked third) and Toyota Prius (ranked seventh). In terms of market share, Toyota enjoyed a lead of 19.4%.

We recommend the shares of Toyota Motor as Neutral.

Comments

[a. palmer jr.:]

Shows you how stupidly our government people think. Why didn't they exclude foreign makes from the incentive program? I don't think our aim was to prop up foreign competition. Since this was done with American taxpayer dollars, I as a taxpayer would like for this program to have helped OUR businesses.

Sep 27 10:33 AM

[Douglas Kor...:]

If you're really worried about throwing Taxpayer dollars down the drain, you should protest giving $50 billion in our money to the same band of nincompoops who ran GM into the toilet. They are just as stupid now as they were before the gummint funded them.

Actually, Toyota makes many cars here in the USA, it's more of a contributor than a beneficiary; at least they provide good jobs and tax revenue. GM just sucks down cash and spits out layoffs; GM is planning to move production off-shore, they have no loyalty to those who supported them all these years.


On Sep 27 10:33 AM a. palmer jr. wrote:

> Shows you how stupidly our government people think. Why didn't they
> exclude foreign makes from the incentive program? I don't think our
> aim was to prop up foreign competition. Since this was done with
> American taxpayer dollars, I as a taxpayer would like for this program
> to have helped OUR businesses.

Sep 27 04:43 PM

[sethmcs:]

Very foolish to lose the captive finance arm. Very foolish.

Sep 27 06:45 PM

[User 344028:]

Thanks Douglas for your insightful comments.
To all uniformed commentators who say that the "Cash for Clunkers" should have only benefited US auto makers, please note that the primary Japanese auto manufacturers (Toyota, Honda, Nissan ) also manufacture vehicles in the US. You should also keep in mind that not all US auto manufacturers restrict manufacturing in the US since they also have plants in Canada and Mexico. What we have is a global economy so "buy American" or "made in America" themes are outdated & protectionist

Sep 27 06:58 PM

[Glenn Mercer:]

Sethmcs: I believe they are NOT selling their captive finance arm, but that the captive finance arm of Toyota is selling its securities brokerage unit. So the captive will still be intact to make car loans and leases... they are just getting out of the securities brokerage business.

Sep 28 10:28 AM

[MellowGuy:]

It's a good idea to free up some cash to speed the improvement in models to use less energy through direct fuel injection, hybrid, and plug-hybrid technologies while reducing the weight of the vehicles by the use of aluminum, titanium(?), and composites.

The USA needs to change its tax structure to have a value added tax (smart sales tax) instead of putting the tax burden on working people.

Sep 28 11:17 AM