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Despite the biggest product challenge and subsequent PR fiasco in Toyota’s (NYSE:TM) history, it seems a bit surprising to find that investors and customers are staying loyal to the company.

No company has received more negative press since the beginning of the year than Toyota. Yet their stock price is down only 9% since the beginning of 2010. Major Dow components like Alcoa (NYSE:AA), AT&T (NYSE:T) and Verizon (NYSE:VZ) have all performed much worse during the same time period.

Toyota’s stock opened trading today at $76.72 which is still above the midpoint of their 52-week trading range of $56.79 - $91.97. How can a stock with as many challenges as Toyota is currently facing, not be trading at a 52-week low?

The answer is simply because investors believe in Toyota. Not only are they not even trading near their 52-week low, but the stock price appears to be stabilizing.

And its not just investors that are sticking by Toyota in this dark hour – their customers are as well. A recent poll by Consumer Reports found that an amazing 60% of current Toyota owners are likely to purchase another Toyota. While that number is down from 70% last year, it certainly reflects the high degree of loyalty that Toyota owners have.

February’s auto sales figures should also be considered a win for Toyota. Sure, sales were down 8.7% for the month, but that was really a very modest decline. Not to mention any names, but if other auto manufacturers were facing this great of a challenge there sales would likely be down 40-50% or more.

Toyota also still had 2 of the top 5 selling vehicles in February (Corolla and Camry).

Sure, Toyota’s brand has been tarnished over the events of the last few weeks. Last year, a study by Interbrand ranked Toyota as the 8th most valuable brand in the world. Undoubtedly Toyota will see a drop in their ranking in 2010, but they still remain among the elite brands in the world.

Toyota’s competition also seems to be trying to help the struggling auto manufacturer.

3 weeks ago – Honda (NYSE:HMC) announced problems with their air-bag systems and is recalling 826,000 vehicles.

Yesterday – General Motors announced that they were recalling 1.3 million vehicles due to power-steering problems.

Today – Nissan (OTCPK:NSANY) is recalling 540,000 vehicles due to brake-pin and fuel-gauge problems.

In conclusion, while it is surprising that Toyota’s sales and stock price have held up so well during this crisis, it also is a reflection of the true power of the Toyota brand. Toyota is facing a serious near-term challenge, but the consensus seems to point to a strong recovery on the horizon.

Disclosure: No Positions

Source: Toyota Investors, Customers Remain Loyal