Toyota's Attractive Prospects and Global Positioning

The car maker from Japan, the country's largest, suffered a drop in August output, but the pride of Toyota City remains primed to continue its automotive leadership worldwide. Global output from Toyota (TM) fell around 9% year over year, but conditions economically are more stable and the additions of government programs, such as the US Cash for Clunkers and Japan's subsidy program, are helping efficient automakers move more units.

In fact, Toyota has reaped the biggest benefit of the majors from such programs and has raised its 2009 calendar year production run. The rise of 8% means the manufacture of 6.45Million vehicles total for this year. It was widely reported that Toyota owned the largest percentage of new vehicle sales under the Cash for Clunkers program in the United States, with the brand owning 3 of the top 5 new car spots, a testament to the message of Toyota as a fuel-efficient, safe and reliable car maker. Moreover, in Japan, Toyota enjoyed a 9% sales rise in August due to the Japanese subsidy program, that similar to the US, offered nearly $3000 towards the purchase of a fuel-efficient vehicle.

Toyota has rallied from lows in the mid 50s with the market since March and had hit a new high in the mid-high 80s as recently as a month ago, however, with the stock sliding below the $80 mark, down 2% Tuesday, it's time to look at Toyota again as the stable play in the automotive sector and the one with the best chance for production growth in its near future as the global economy recovers in 2010.

Disclosure: Author does not own TM

Government owned General Motors bails out Dealers stalled by Government [Update]

This little gem of a news story is making the rounds recently as General Motors dealerships across America are on the verge of closing shop due to cash flow issues relating to the Cash For Clunkers program.

The program itself has been a huge success for the Automotive Industry, specifically the car makers, with not only General Motors, but American rival Ford (F) announcing increases in production to keep up with demand. So far reports indicate that about 450,000 vehicles have been sold in the US qualifying for the program, with recent statistics showing Toyota (TM) vehicles holding 3 of the top 5 spots. Nearly half a million vehicles is not an insignificant number in the fight to increase average American fuel economy but herein lies the rub. The wildly successful program has already run out of money once, gotten an infusion of cash to extend it, and still is so far behind the 8-ball on the administration side of things that dealers around the country may have to shut their doors. While this program is expected to bump vehicles sales past the 1 Million mark for the first time in longer than a year, the under-pinnings of and bureaucratic red-tape within this program still have a ways to go.

Cash For Clunkers, which gives up to $4500 in rebates to car purchasers, provided they buy fuel efficient vehicles and trade in gas guzzlers or old piles of road junk, is leaving dealers holding the bag when it comes to running operations. It is now reported just how far behind the Government is in issuing rebates to dealers, with 37% of rebates having been processed, but the percentage of payouts still unknown. The articles flying across the news wires lately have been full of quotable frustrations from dealers. One company is apparently looking out and stepping in to help.

General Motors is that company, 60% Government-owned General Motors following the structured bankruptcy that is. The company, err Government, is lending money to dealerships in an attempt to keep them operating until the Government can process their sales and send the appropriate rebate dollars. GM will take the money back from dealers within a month's time if the Department Of Transportation has issued funds to that specific dealer, so this plan is wildly considered an operational stop-gap measure. General Motors is on the right track here as in the market share game, it can't afford to have its dealership network crippled during the busiest car buying spree in over a year. The irony of it all, especially for Uncle Sam is something else entirely!

Update: Press updates regarding 37% of rebates process with unknown % having been paid out.

Disclosure: Author owns TM, holds no position in any other companies mentioned