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Toyota Motor (NYSE:TM) appears well on its way toward producing more than 10 million vehicles worldwide this year, and this would be an all-time record for any automaker in the world while others will only be fighting it out for the second place at best. It goes without saying that Toyota is the largest automaker in the world but all is not rosy as seen in its recent first-quarter results.

Bumpy road

Consolidated revenue in the quarter jumped 13.7% year over year to $63.2 billion despite a 1.6% drop in unit sales to 2.2 million units. Despite lower number of units sold, the company managed to post higher revenue due to favorable gains from currency translations to the tune of ¥260 billion ($2.6 billion). Moreover, cost cutting initiatives leading to a benefit of ¥70 billion ($707 million) and were responsible for offsetting the rise in expenses to the extent of ¥60 billion ($606 million).

Unit sales declined 8.8% in Japan, 7.8% in Europe and 5.7% in Asia. The negative sentiment in these regions was offset partially by gains of 7% in North America and 4% in other markets. In addition, Toyota has often been criticized due to its series of vehicle safety recalls over the past few years and this has caused the brand to take a beating.

Very recently, it recalled around 342,000 Tacoma trucks to fix faulty front seat belts, although there have been no accidents. Prior to this, in July 2013, the company had recalled around 185,000 of its subcompact cars for fixing problems in the power steering.

On the earnings front, Toyota clocked EPS of $1.79, which signifies a very strong year-over-year rise of 93.4%. The gains primarily were from favorable currency translations and proactive cost control measures that the company has been implementing. Consolidated net income moved north 87.8% year over year to reach ¥604 billion ($6.1 billion).

Looking ahead

With a strong focus on hybrid models, Toyota is planning to gain traction in that segment. It sold its five millionth hybrid earlier this year and has plans to expand further in this segment globally. It is expected that Toyota will be bringing in the new Prius liftback early in 2015, packed with innovative and more powerful technology under the hood.

It also intends to gain market share in North America from the "Big Three." The world's highest selling car company has ambitious plans for the North American market. Toyota plans big on introducing multiple redesigned and face-lift cars over the next two-three years. It is also said to be having plans for replacing few of the old models with some futuristic, contemporary models. The company is also looking to give its brand a boost, and recently gifted its 50-millionth customer a RAV4 apart from paying off the loan on his existing Camry bought earlier this year.

In the overseas market, it aims to increase sales by introducing newer models. Toyota is also planning new compact cars in order to gain market share. It is also targeting first-time buyers in countries like Myanmar, Kenya and Cambodia and is aiming for about half of global sales from emerging markets.

Other automakers -- Ford and Honda

Toyota has quite a few competitors, but we will pick up two for comparison. One from its homeland of Japan, Honda (NYSE:HMC), and the other from the U.S., Ford (NYSE:F).

Ford has been on a roll and its latest second-quarter results saw it beat consensus estimates on both revenue and earnings, notching respective figures of $38.1 billion in revenue and an operating profit of $2.6 billion. Ford saw a volume increase of 16% as compared to the year-ago quarter.

Ford was on a roll in China in the month of June, and the company is also hopeful of coming back to the black in Europe by 2015. In China, Ford has improved its market share by 1.5%. On Ford's home turf, it's a neck and neck fight with Toyota. Toyota sales were up by 8% in the first half of the year. In July, Toyota sales grew 17%, and for the first time in three years, it sold more than Ford on a month-to-month basis.

Ford has increased its market share in the hybrid market though, through sales of models like C-Max, Fusion and Lincoln MKZ. But the company needs to watch Toyota's models such as the Camry and its hybrid offerings if it is to stay ahead of the Japanese behemoth on a consistent basis.

But Ford is making some good progress into emerging markets such as India and China. The company's EcoSport SUV has been beating competitors in India and sales have been rocketing in China. It looks like Ford's formula for the emerging markets is working and along with progress in the U.S. and Europe, the company can scale greater heights, but it will have to be top of its game to beat Toyota.

On the other hand, Honda ended the first quarter with a 7% drop in EPS to $0.69, while revenue moved north by 16.3% from last year to $28.75 billion. The increase in revenue was primarily fueled by favorable currency translations.

Honda is a leading automobile manufacturer and the largest manufacturer of motorcycles in the world. Macroeconomic conditions did impact volume growth. But Honda plans to invest $215 million on building infrastructure at its Ohio plant, which will enhance the capacity of the engine plant and also build training centers. It also plans to build the new Acura NSX sports car at the same facility.

According to reports, Honda has invested around $2.7 billion across North America. It has also inked a partnership with General Motors (NYSE:GM) to develop next-generation fuel cell vehicles in order to meet the fuel economy standard set in the U.S. Both the companies are aiming to develop this by the year 2020. The two together have more than 1,200 patents filed between 2002 and 2012. This partnership is expected to help bring down costs of this expensive technology.

Conclusion

Toyota has an ambitious plan to extend its lead over the other automakers despite facing certain issues like product recalls. The company will be introducing new models in the future as it focuses on keeping its momentum going in the U.S. market. Toyota is also looking to profit from emerging markets with its budget models and for these reasons, I believe that Toyota can continue cruising nicely.

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