Toyota says it's no longer profitable in North America

[IDemo]

Source: Detroit News

David Shepardson / The Detroit News

Washington -- Toyota's top executive in the United States said Monday the company was reviewing its entire operation here, including whether to close a factory in California and when to open a factory in Mississippi.

In an hour-long interview with reporters at Toyota's Washington office, Yoshimi Inaba said Toyota is not profitable in North America despite cost cutting in the organization, but he said he hopes the company could be profitable in its next fiscal year in North America. Inaba, who is president and chief operating officer of Toyota Motor America and chairman and CEO of Toyota Motor Sales USA, is taking up his responsibilities at a crucial time for the Japanese automaker.

Toyota's sales have fallen 38 percent in the first six months of the year -- to 770,000 cars and trucks from nearly 1.25 million vehicles in the first six months of 2008. U.S. industry auto sales fell 35 percent in the first half of the year.

Among the issues the company is considering in its re-evaluation process is whether to keep open the 25-year-old New United Motor Manufacturing Inc. assembly plant in Fremont, Calif. The plant, which employs 4,700 people, is a joint venture formed with General Motors, but the Detroit automaker recently withdrew from the pact during its stay in bankruptcy court.

Read more: http://www.detnews.com/article/20090721/AUTO01/907210324/1148/Toyota+says+it+s+no+longer+profitable+in+North+America

[jschurchin]

1. It's all the Union's Fault.

If it wasn't for them Toyota would be..............oh wait. They are non-union. It's still the Union's fault:sarcasm:.

The tags for all my friends who may wonder.

[pattmarty]

10. I know, it's mainly the union's fault, but you also forgot the bigger..................

................problem, Bill Clinton. It was the "blowjob" 10+ years ago that started Toyota's decline in the US.

[xchrom]

21. bumping your reply. nt

[Codeine]

33. They aren't totally non-union.

A few models are built at the NUMMI plant in California with UAW labor.

[ingac70]

48. That is/was a joint venture with GM. n/t

[Codeine]

50. I know.

The upshot was, I could buy a UAW car made by Toyota.

[graywarrior]

2. Is this why you can't buy a Yaris or Prius at any Toyota lot?

Toyota dealerships are pushing Camrys and Corollas claiming that the comany stopped making the Yaris and Prius models.

[IDemo]

3. Which Toyota dealerships are claiming the Prius is no longer in production?

I haven't heard that one before.

Of course, I bought my current Toyota new in '93 and haven't been in a salesroom since.

[graywarrior]

5. Two in MA that I went to.

They both had two of each "somewhere" on the lot and claimed they could not get anymore. Said 2010's would likely be coming out but they were behind in orders.

[Kolesar]

8. Classic Toyota told my friend it would take 6 months to get a Prius, but Classic sucks

They f-ed up the other model that she did "order". They were lying to her about the six months. Dealers lie. So I would not trust this story about insufficient supply.

[kenfrequed]

32. 'zactly

"... but you can buy this gas guzzling SUV which we have too many of and can't possibly sell because no one really wants them anymore"

[IDemo]

11. I don't think that equates to "not making them anymore"

The demand for these has always been high, and there have been waiting lists. But that just means Toyota hasn't been able or willing to ramp up production fast enough to meet demand, not that they aren't in production at all.

[graywarrior]

15. But the dealers really tried to push us to the Corollas

they had a lot of them.

[IDemo]

16. It's certainly understandable they would want to make the largest profit

But if in doing so, they make false claims about a model that has been a major success for the parent company, I would think that would jeopardize their status as a dealer.

Just my two cents. Off to work on my two-wheeler.

[awoke_in_2003]

35. most likely unwilling...

high demand means higher profit

[dipsydoodle]

18. There's been a model change to 2010 M/Y

and I don't think the new one is due out until September - better engine or so I've read.

Some details here : http://www.examiner.com/x-12808-Auto-Broker-Examiner~y2009m7d21-2010-Toyota-Prius

[1monster]

22. I counter that with the fact that my 1990 Astro Van lasted until a less than stellar mechanic made a

disasterous replacement of the fuel pump on it (he didn't replace all of the bolts and sand worked its way into the engine as a result) eighteen years later.

If not for that, I'd still be driving the thing at 20 years and closing in on 300,000 miles.

Toyota isn't the only quality built car.

[bongbong]

26. Astro van

I had a friend buy an Astro van for his business. It was his first American-made car. Now he has close to 200,000 miles on it, and he has never done anything more than normal maintenance.

[1monster]

30. Great cars... and they're good on gas mileage considering their size... I don't use

air conditioning in my cars as a personal choice so I was averaging about 25 mpg on it.

[madrchsod]

6. the margins are greater with camrys and corollas.

the yaris and prius have lower margins for the dealerships. it also depends on the quality of the trade in.

us car dealers have always used cheaper autos to sell against.

[gorfle]

17. Ding! We have a winner.

the margins are greater with camrys and corollas.

This, my friends, is the heart of the problem.

The auto industry does not want, and probably cannot afford, to make small, cheap, inexpensive automobiles.

People were content to spend $30K or more for a big chunk of iron that satisfied all their needs, be it luxury, cargo hauling, people hauling, distance driving, or sport.

But first of all, people can't afford $30K automobiles anymore.

Second of all, most people expect that if they are going to compromise on all the things they used to want in a car, driving, say, a Yaris instead of an Explorer, then they are going to expect it to be cheaper.

But as you noted, the profit margins aren't there in the little cars.

Electric cars are going to be even worse for the industry. Today, modern internal combustion vehicles have over 100 years of engineering invested in them to make reliable power train systems. And the barrier to entry is steep for anyone else who might want to try and make automobiles, for they would have to duplicate that power train expertise.

But batteries and electric motors are commodity items. Anyone can buy them and install them in their chassis. This makes them much cheaper to implement.

Combine this with the lack of service needs (no oil changes, etc) and the profits on electric cars will be even slimmer.

[melm00se]

31. 1600 prius (priuses/priii?)

in the Southeast US

654 Yaris in the same area.

the issue is that Americans don't like small (as my wife calls them "clown cars") and hybrids, for all of their environmental advantages, require high gas prices to move. The bottom fell out of the market in March (http://articles.latimes.com/2009/mar/17/business/fi-hybrid17) and without some compelling event to make people shift (or more of a price equalization), hybrid sales will suffer.

[LeftyMom]

41. "Americans don't like small cars or hybrids"???

You can only make that statement true if you believe that Californians aren't Americans. :rofl: Small cars and hybrids are both crazy popular here.

[madrchsod]

4. at least he did`t blame the american worker for their failure.

their automobiles are as enticing as a pile of bricks....

[No Elephants]

7. He didn't have to. Americans will take care of blaming the American worker.

[WriteDown]

9. They are lazy and insolent...

And rarely sacrifice themselves for they're shogun...er...employer.

[PainPerdu]

27. Hare Kiri

Not so,ask any WalMart employee-they ARE sacrificed daily upon the Walton altar.

[Odin2005]

12. Where are the Toyota apologists now? Buhler?

[michreject]

13. I hope they go broke

Fold up shop and leave.

[dipsydoodle]

19. Wouldn't really help

Maunufacturers share certain aspects of production and distribution. If Toyota disappeared would cause other manufacturer's cost to increase.

[michreject]

24. Along with sales nt

[hamsterjill]

28. Me, too

Toyota has a long history of treating its workers, particularly its female workers, badly.

I wouldn't have one of their products!

[NickB79]

37. And bankrupt the parts suppliers?

The same ones that also supply parts to GM, Chrysler, and Ford? US auto manufacturers would be crippled.

[madmom]

14. $10 an hour here we come. They pay there workers an average of $14 an hour. Now they

have the unions going down to the same. So next step lower wages for the non-union. I predicted this when the union started lowering their wages to match non-union shops. The cycle never ends!:banghead:

[Auggie]

20. Or, it's no longer profitable to BUILD cars in North America

Why pay American wages when you can get it elsewhere so much cheaper?

They could turn a profit on volume. But when volume drops they have a problem. In North America.

[ingac70]

49. Even if they made them all in China....

People can't get financing for a vehicle right now unless they have 700+ credit scores. Most people don't have that kind of credit.

[liberal N proud]

23. Are Americans finally realizing Toyota quality isn't any better than Ford

or Chevy or Chrysler quality?

[fujiyama]

43. I really wouldn't compare Chrysler to the other two

but Ford's quality is just as good or better than Toyota, and Chevy is not bad either.

Chrysler actually has quality issues. I don't think it's just a perception problem with them.

[liberal N proud]

44. Really, tell that to my 2001 Chrysler with 145000 miles on it.

I have spent no more that $4000 dollars on repairs in the 9 years that I have owned the car.

Most of that was normal wear items. It still drives and runs like it should. The last Toy drive, I couldn't wait to get back to my Chrysler.

[Devil_Fish]

46. Ford sucks.

We had a Taurus. The transmission goes out every 70k like clock work. they sell it with a 100k warranty, which factors in the fact that they will have to replace the transmission once under warranty which is fine with them cause the damn thing is built so cheep any way.

My brother in-law was trying to sell his Taurus. every one who called asked two question before hanging up:

1. Q: how many miles are on it? A: 72k

2. Q: has the transmission been replaced? A: No

(CLICK)

Ford used to be good. Gram pa had a 63 custom cab pick up. Best truck in the world. I wish my dad hadn't sold it.

Now we live in a disposable society.

[SOS]

25. Maybe if Wall Street banks hadn't robbed the American worker of his last cent

we'd have some money left to buy a new car.

[OhioChick]

29. They're not profitable because no one has jobs. n/t

[SoCalDem]

34. California is in North America, and Mississippi is not?

:rofl:

I knew it was somewhere near the bottom, but that sentence is odd..

This is just more state-to-state cannibalism.. dump a factory/labor force in a state that hase a higher standard of living, and move to a sesperate backwater place with cheap labor and that is willing to "wheel & deal"..

[ProudDad]

36. A very good thing

Fewer cars = slight chance air-breathing mammals may survive this century...

Very good thing...

[NickB79]

38. Do Toyota employees in the US get health care benefits?

What impact does the lack of single-payer health car (like they have in Japan) have on the cost of manufacturing cars here in the US?

[FarCenter]

40. They can probably do better now

Since Toyota has a fairly young work force, and relatively few retirees, they can most likely negotiate a pretty low cost health insurance plan. Even for retirees, they probably would only provide a very modest gap-filler for Medicare coverage.

[FarCenter]

39. I think that the NUMMI plant is still half owned by "Old GM"

While the "New GM" is no longer related to the NUMMI plant, the "Old GM" which is still in bankruptcy and owns all the unwanted bit of GM still owns the half-interest in the NUMMI plant.

So Toyota is stuck in a position where it is operating a plant half owned by a bankrupt partner.

How it will end is not possible to know without knowing the specifics of the existing agreement between Toyota and GM. For example are there "going concern" clauses that stipulate the options enjoyed by the viable partner when the other partner becomes insolvent. The contracts and the lawyers will likely be the determining factor in what Toyota does.

I'd speculate that Toyota will shut the plant and attempt to legally wall it off from the rest of the company so that the legal damage is minimized. That also simplifies their labor relations issues, by getting rid of the unionized plant. I think they also delay the Mississippi plant for a year and boost production at other plants until the NUMMI plant makes it through the courts and in a couple (few?) years.

[Jack_DeLeon]

42. I hope they close the California plant...

and bring more jobs to our neck of the woods.

Let the free market decide.

[eilen]

45. When did they start being profitable in the US?

I understand they sold cars here at a loss to capture market share--- at least less than they charge for their cars in Japan.

[ingac70]

47. Good.

I hope they end up filing for bankruptcy.