By on February 2, 2010

Toyota Sienna boy band, Boyota from Jennifer Vuong on Vimeo.

Standard & Poors Equity Research [via BNET] says you shouldn’t dump that Toyota stock just yet.

Will the aggressive action of cutting production and recalling so many vehicles scare away potential Toyota buyers, or will consumers think the abundantly cautious response shows a commitment to customer care and quality? We think it is too early to tell, but we believe resilience and global growth of vehicle demand will help TM (Toyota Motors)

You know, until mechanics actually start finding malignant hellspawn demons within Toyota electronic throttle control units. In which case you should invest heavily in law firms. Meanwhile, Toyota is apparently hiring shamans to cleanse their new product of metaphysical infestation by way of bizarre voodoo ceremonies like the one shown above [Hat Tip: Vanity Fair Gay Cars blog].

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18 Comments on “S&P Sticks With “Buy” Rating For Toyota Stock...”


  • avatar
    Mr Carpenter

    This gentleman’s editorial commentary pretty well sums up my assessment of the situation. Especially the last sentence.

    http://www.wnd.com/index.php?fa=PAGE.view&pageId=123686

    I also find it highly interesting that Honda, Ford, GM and Chrysler also use CTS pedals (which of course, may be different from the Toyota pieces – with the obvious exception of the Pontiac Vibe, which will be precisely the same units as the Toyota Matrix from which the Vibe is derived).

    • 0 avatar
      pgcooldad

      The author of the article states, ”The American Company (CTS of Elkhart, Ind.) that supplies some Toyota models with the gas pedal in question also supplies the same gas pedal to Honda, Ford, GM and Chrysler. “

      And that is were he lost all credibility since he didn’t bother to check that although Chrysler uses the same suppliers they are NOT the same pedals.

      In a statement, Chrysler said accelerator pedals made by CTS for the company, “are a different specification and design and are manufactured using different production tooling and materials than the pedals produced for Toyota.” , as written below.

      http://money.cnn.com/news/newsfeeds/articles/djf500/201001281651DOWJONESDJONLINE000776_FORTUNE5.htm

      My disclosure: I work for Chrysler.

      His disclosure: My family drives Toyota cars…

    • 0 avatar
      L'avventura

      There is some truth in that, and its been brought up by several other news sources as well.

      Let’s also consider, that the congressional hearing against Toyota have been initiated by Michigan Congressman Bart Stupak, a congressman from the home state of the U.S. domestic automakers.

      http://tiny.cc/H5kp4
      http://tiny.cc/RLIpv

      You would think, being that the US government under the Obama administration owns the largest domestic automotive maker along with the UAW, a more neutral congressman would be a more ideal to look into a foreign automaker then a Deomcratic congressman that has VERY close ties to the UAW and Detroit

      In fact, Bart Stupak is one of the key individuals behind the Automaker bailouts and wrote legislation for the government buy-out of GM, something he brags about on his government homepage:

      http://www.house.gov/stupak/issues_loansforthe_autoindustry.shtml

    • 0 avatar
      pgcooldad

      The Toyota Tech Center is in Ann Arbor, MI. which employs 110 people.

      http://www.annarbor.com/business-review/ann-arbor-regions-toyota-technical-center-not-connected-to-recalled-vehicles-executive-says/

      Bart Stupak’s congressional district is the Upper Peninsula and Upper Lower Eastern part of the state. He has nothing to gain by the investigation.

    • 0 avatar
      pgcooldad

      Ooops, make that 1100 people.

    • 0 avatar
      L'avventura

      @pgcooldad

      You gotta be kidding me? 1,100 people is nothing compared to how many people work for the Big 3 in Michigan. Stupak is also has long-term aspirations to be governor.

      Obviously, the Big 3 are in his best interest.

      Not only was he one of the primary individuals to behind “Government Motors” but he was also one of the few democrats to oppose Senate Fuel Bill regarding increasing milage standard.

      http://tiny.cc/iFFAB

      Also he has already admitted the the UAW has been in close contact with his comitee according to the WSJ:

      “Mr. Stupak said the UAW hasn’t contacted him personally on the Toyota recall but may have contacted his committee. The panel also includes Rep. John Dingell (D., Mich.), a staunch ally of the union and Detroit’s auto makers. ”

      http://tiny.cc/GaNyb

  • avatar
    mikey

    I’m sure the people that have lost love ones,will take comfort in the knowledge that it was all a left wing,pro UAW conspiracy.

  • avatar
    Mr Carpenter

    It isn’t a conspiracy. It’s simply the powers that be manipulating events, just as they always do.

    Frankly, people have been dying off in droves in automobiles for 115 years or more. Usually due to their own stupidity, but sometimes due to mechanical problems.

    How about the first ever HUGE recall in the US? (Unsure if Canada got into the act).

    Mid 1960’s CHEVROLETS – virtually all of them – would tear the driver’s side motor mount, allowing the engine to stick on full throttle – GM’s “approved” fix wasn’t even to replace the motor mounts but to put a chain on the engine to hold it down.

    Not forgetting that in this era, Chevrolet sold about 1 in 4 cars on the American road, and in Canada, Chevrolet engined Pontiacs and Chevrolets made up about 1 in 3 cars sold.

    So, Mikey, did Canada ever recall those Chevies and Cannuck Ponchos?

    If not, why not? Doesn’t your government care about people dying?

    (tongue in cheek, okay?) (I’m pretty sure they probably did recall them, but not living in Canada, I don’t know/didn’t see the news – besides, I was just a kid then).

    • 0 avatar
      Steven02

      It was cars and trucks with V8’s (not virtually all). But GM’s approved fix isn’t really any different than Toyota’s. It was to save costs. $50 for motor mounts or a $1 for a cable. It would also take a lot longer to make the motor mounts. This is essentially what Toyota is doing. The shim attached to the pedal instead of a pedal replacement.

      I am not defending what GM did back then. I am also not defending what Toyota is doing now, but you can see some very big similarities.

    • 0 avatar
      Robert.Walter

      I’m not saying that I am in favour of GM’s approach …

      from Time magazine 13 Dec 1971: (edited here for brevity)

      “Nader began picking up a pattern of complaints about some products made by Chevrolet. Scores of Chevy engines from 1965-69, the letters said, were twisting loose from car frames, sometimes with the accelerator pedal pulled to the floor and the brakes failed. At about the same time, NHTSA was looking into similar complaints. That combined scrutiny led G.M. to announce the largest auto recall ever, 6.7 million cars and light trucks.

      Problem is that in cars equipped with V-8 engines during that period, a rubberized layer between two pieces of metal on the mounts has deteriorated, loosening the entire assembly. G.M. engineers recognized the trouble more than two years ago and designed a replacement part with a T-shaped metal bar that prevents any slipping, even if the rubber has worn away. But only a few Chevy owners notified under the recall will actually get that part, which costs $30. Unless the design of the engine will not permit it, the rest will have to settle for brace-like “restraints” that will reportedly cost G.M. about $5 each, including installation.

      G.M. officials maintained that the rubber section “obviously cannot be expected to have the life of the metal parts that it connects.” Thus, they said, engine mounts should be regarded as items, like fan belts, that must be regularly checked and serviced when necessary—although they rarely are on most cars.

      Yet the company apparently did not want to test that claim in court. Federal officials last week were preparing to issue a formal notification of defect. By announcing the recall, G.M. clearly hopes to avoid any legal entanglement resulting from problems with the engine mounts.”

      So, GM saved money by turning a safety issue into a customer satisfaction issue (this is also an example of the mentality of what took them down in the long run.) GM’s legal responsibility was to make sure their products didn’t kill their customers (their market responsibility was to do right by their customers.)

      Is Toyota emulating GM? Not intentionally.

      Did Toyota study GM’s mistakes? Perhaps, but not much time for that, as they were busy on the way up, moving from success to success.

      What is the difference between GM and Toyota, and the circumstances of recall between then (during the engine mount recall) and now (with the mat-entrapment, and ePedal, recalls)?

      1. Organizational:
      – both companies were at the top of their game;
      – their customers were loyal;
      – their reputations were solid;
      – they had enormous economic and political power;
      – they had all the resources necessary (competence, cash, customer-good-will) to handle recalls in any way possible.

      2. Societial:
      – rise of internet: ideas and opinions exchange via this medium makes it impossible for an OEM to shape, or out-run, public opinion;
      – rise of skepticism: having faith in an organization, or taking the word of an individual, disappeared with Vietnam, Agnew, Watergate, Iran-Contra, Jim & Tammy Baker, Lewinski-affair, Enron, Iraq WMD, Spitzer, Madoff, John Edwards;

      It is no longer possible for an individual or company to outrun scrutiny … news travels too fast … info leaks out … the public speaks to the public via new media … and creates and amplifies its own opinion.

      Lack of transparancy and authenticity today will doom a company.

  • avatar
    mikey

    Yes they did only the small block V8s

  • avatar
    mfgreen40

    Like I wrote yesterday, If Toyota wants to know how not to do this properely, they have Detroit for an example.

  • avatar
    Canucknucklehead

    I bought Toyota stock yesterday. It, along with Ford, are the buys of the year. Toyota has strong fundamentals as a company. They are swimming in cash, have excellent retention and some of the best reliability in the business.

    And yes, four people have been killed in something like 2.2 million cars. How many of those 2.2 million killed themselves driving too fast, while drunk or by eating McVomit’s food. That number is in the thousands. But the public at large knows nothing of statistical analysis. You are far more likely to be killed walking across the street to your Toyota.

    As a comparison 254 people died in Jeep Cherokee fire deaths on a similar number of cars. This means you are 51 times more likely to die in a Jeep than a Toyota. Did this cause a hullabaloo in the media? Nope, and I am sure race was part of the reason.

    http://blogs.consumerreports.org/cars/2009/10/potential-fire-hazard-may-trigger-recall-of-jeep-grand-cherokees.html

    • 0 avatar
      Steven02

      19 deaths have been reported in the US from SUA. It was only the family of 4 that made the news.
      http://www.latimes.com/business/la-fi-toyota-pedal30-2010jan30,0,4401302.story

      I am not sure how the comparison matters unless you want people to say that one is bad too. IMHO saying one thing is bad, but this other one is really bad doesn’t mean the first case isn’t bad.

    • 0 avatar
      ClutchCarGo

      Work the statistics anyway that you want; people still respond to these things emotionally, not logically, and it remains to be seen what the general public’s mood towards Toyota will be by the time that this winds down. One really bad bit of timing for Toyota is that February is ratings sweeps month in the US. You can expect every local news team to be scrounging around for a hapless Toyota owner to fearfully describe their own “brush with death” due to SUA. And even tho those news stories will also have a short statement by a happy Toyota owner, the public will get the impression that for every happy owner there’s another owner who had this problem, when in fact a very small number of owners have actually experienced any throttle issues at all. Not to mention the number of stations that will do an examination of the pedal mechanisms like that done here on TTAC, only shabby and sensational instead of careful and thoughtful. It’s a ratings bonanza!

    • 0 avatar
      baldheadeddork

      I own some shares in Ford, and I love bargain stocks, but I’m not buying Toyota yet.

      This is still a very expensive stock. TM’s market cap is over 3x Ford, VW, Nissan and Daimler, and more than twice as large as Honda. They have a weak dividend that’s been cut three in three consecutive periods and it’s in danger because they’re not profitable and this gas pedal recall is going to burn a mountain of cash from their reserves. They have already announced that the weak dollar is going to keep them from making a profit in the US in 2010, and sales in Europe are expected to be much lower than 2009 because of the end of buying incentives. Right now analysts are projecting $3.24 EPS for FY2011 (which doesn’t begin until March 2010). I expect the currency valuations and the damage already done by the gas pedal recall is going to cause a substantial downgrade in those estimates, and when they are downgraded the share price is going to follow.

      I also don’t know if the market has priced in the cost of this recall and PR nightmare. TM is trading today at ~$78, which is still above it’s average price for the last twelve months.

      And we still don’t know if Toyota has really figured out the cause of the unintended acceleration, or if the shim fix is going to work. If they roll this out and another Camry or Avalon flies off a parking deck or into a lake, the bottom is going to fall out.

      TM is a falling knife. Try to catch it at your peril.

  • avatar
    Steven02

    Surprised no one comment on the boy band. Only mildy better than the Volt dancers.

  • avatar
    ohsnapback

    S&P is so good at what they do, they had buy ratings on Lehman and Bear Stearns (as well as many other now defunct companies), and AAA+ ratings on bundled residential backed mortgage security CDOs in 2007.

    In other words, do the opposite of what S&P states, and you’ll fare much better statistically.

    (What does on expect when their business model only generates revenue based on ‘buy’ ratings, and no revenue on ‘sell’ ratings).

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