I find the whole “TTAC is pro-Toyota” meme a little strange. Have a look at our coverage of their greenwashing or our reviews of their automobiles (including our excoriation of various Scion). Yes, The Big 2.8 get ten times the coverage afforded the transplants. But we’re an American-based website, and the Motown meltdown is the biggest story in the history of American automaking. Yes, our Bertel Schmitt recently wrote a compare and contrast blog, pointing out the differences between Toyota’s response to the auto industry meltdown with GM’s. But it’s the truth dammit, and that’s the business we’re in. Feel free to discuss TTAC’s “perception gap” below. Meanwhile, I want to point out that Autoblog’s recent “discovery” [via their BFF at AutoLine] that Toyota has “only” $18.5b worth of cash, supposedly placing them in the same boat as, say, GM, is wildly disingenuous.
Toyota is burning cash, but they have had positive earnings for decades. They have little debt, assets aplenty and they can borrow tens of billions if needs be.
Toyota has the strength, ingenuity, flexibility and the firm grasp on reality needed to survive both their own mistakes and the violent contraction of the global automobile business. Is there anyone who doubts it? If they do, they either have an axe to grind or badly flawed analytical abilities. And that’s the truth.
[thanks to Matt Bell for the throwdown]
Nope, none. Who’s Matt Bell?
….supposedly placing them in the same boat as, say, GM….
Sounds more like wishful thinking on Autoblog’s part. No matter, they are not in the truth business anyway.
It’s not so much you guys are pro-Toyota so much as you are anti-anything-detroit, though I do understand your frustration. They are often an easy target as of late.
Who the hell would think TTAC is pro-Toyota???
The truth hurts sometimes.
There are some third world countries that are better run than GM.
Chrysler is a bottomless money pit run by pimps and thieves.
And Ford continues to limp along like a blind arthritic three-legged dog.
Is this negativity or reality? Would Detroit’s problems go away if we all stopped talking about them?
This is The Truth About Cars, not Wishful Thinking About Cars.
Side note: As much as I love Honda/Acura I would love to see an article with a breakdown of their latest blunders and shortsightedness. Having said that Honda is a raging steamroller compared to GM. Okay bye.
So Toyota is forcasting a 12mo loss for the current fiscal year somewhere under 1 billion. I’d be surprised if the actual cash burn is that large, typically depreciation and other paper writedowns make up a good chunk of reported losses. Toyota could repeat their worst fiscal year again every year for the next decade at least with no outside funding and still be in the game. GM can’t repeat last months performance more than a few more times without outside cash.
As for TTAC’s “bias towards Toyota” – I’m not going to go average out the reviews but my perception is that the stars from TTAC reviews would be pretty even between the two. Toyota gets beat up pretty good here for making lots of boring. Editorials regarding business acumen are a different beast entirely and rightly so.
Robert-
I don’t think Autoblog was implying Toyota was in the same boat as GM. As a matter of fact, they pretty clearly implied that they were more on par with Ford as far as cash levels are concerned.
You should also note that Toyota’s debt, while less than GM’s, is still much higher than previously thought, and is now equal to their assets. That does have an impact on their ability to borrow, especially considering the economic climate and the outlook for the automotive sector.
I think you’re misunderstanding this as an attack on Toyota when, in reality, it was noting the fact that Toyota’s financial position is nowhere near as cozy as had been rumored. (between $30 and $90 billion in cash reserves)
Like it or not, this IS big news.
My bottom line regarding this kind of thing is very simple:
Can a given company earn money selling the vehicles it manufactures?
Or not?
Yes, these are abnormal times, but through it all, “can you make money” is a very simple measure of corporate competence.
Well, it is Autoblog, which makes hay from inciting rabidly pro-domestic into frenzies whenever their page hit counter drops. They strung the Tundra’s launch and the resulting Domestic Truck Fan Insecurity Response out for weeks, while Prius-baiting is practically a sport at AB and ABGreen.
If you’ve seen any other AOL-funded blogs (Engagdet) you’ll recognize the fan-baiting for what it is: naked revenue generation
AB does good work in aggregation, speed and depth of coverage, especially their show coverage and month-end reporting. If they could stop gutter-trawling, they’d be real gem.
While Toyota ended up paying a higher spread, they were still able to issue $5 bn in mid-length debt. Nobody wants GM debt anymore, and even if they did, GM would get cents on the dollar.
Bloomberg Article
If I read it right, in round numbers I see 12 trillion yen of US GAAP equity on their books as of November 2008. I believe this includes Toyota finance arm, similar to GMAC.
http://www.toyota.co.jp/en/ir/financial_results/2009/semi/summary.pdf
Call it a penny per yen and thats 120 billion USD of GAAP equity. GM is negative, what, 40, 50 60? billion equity? I haven’t looked lately. Toyota will take a long time to chew through that equity and I bet they wont be in loss position for long.
Toyota is known by the masses for making reliable, boring cars for the masses. The masses want Toyotas. I think Toyota would be the last one standing. Except for Porsche maybe and the Chinese who have government coffers to fall back on more than GM does.
I worry that the economy will decline further and with “only” 18.5 B in cash reserves it might not be pretty. Toyota was smart not to rely on fleet sales but they may have to cut further R/D or sell brands/factories at fire sale prices. If Ford sold Volvo two or three years ago they would have gotten a lot higher price for the brand and I can see it happening with Toyota and the credit crises. Also a lot of cars are coming on the market that is not wanted so they will drive the prices down on Toyota’s new cars. I don’t see the recession ending within the next two years at least and we are ready have parking lots full of unwanted new cars.
Re: TTAC/Toyota perception gap, nice of you to include links to two star reviews of Toyota Corolla and Matrix along the right side to prove you don’t have an editorial love of all things Toyota. I’ve been reading TTAC for a long time now, and must say the Best and Brainwashed are maybe not all pro-Japan, but are clearly anti-Detroit. Typical comments similar to “my uncle’s 97 Jimmy was junk, ergo all new Detroit cars are junk” or “I rented an Impala back in ’05 and the front end got out of alignment when I hit the curb, ergo…..” makes me wonder when readers are going to start their posts with “Dittoes, RF.” Seems you’re wasting your time with reviews here. Readers are too close-minded to pay attention to them.
I dunno about the anti-domestic bias, even among the readers. Sure, there are a few guys, but not even most. On the whole I’d say my opinion of the domestics cars has gone up quite a bit from reading this website… which may indicate more about my low opinion than anything else.
But really, the main accomplishment of this site is that they have been sounding the horn about the incipient doom of Detroit for YEARS while other news outlets either whistled really loud as they walked past the graveyard or ignored it altogether.
The TTAC guys got it right. The De Lorenzo’s of the world got it wrong. That’s a pretty definite proof that TTAC is hitting some home truths and if those truths seem anti-Detroit your beef is with reality, not TTAC.
As for the 18 billion— Toyota’s stock went up nearly 4 bucks after it was revealed. Guess people don’t think that puts them in the same boat as any of the domestics.
Best and Brainwashed . . . God, I wish I’d thought of that one.
And add another point for the Limbaugh reference.
Priceless.
I hear you Robert. Yes, the truth hurts, and people don’t want to hear it. And when they do, they blame YOU for it.
Being realist is often perceived as being pessimist. Story of my life.
But if your visitor count says anything (I’m assuming it’s going up), it’s that a lot of us can still handle the fact, without being ‘religious’ about cars or brands (a.k.a. pure lack of analysis, common sense, or thinking).
At least the Autoblog story got the people at GMI all roused up after finding out that GM has no clue about what to do with Pontiac (or Saturn or Saab or Hummer) and the inevitable delays in the Alpha platform and CTS coupe. However, for the more rational, the earlier TTAC story re: the Tale of Two Losers tells it all.
I’ve certainly never thought that TTAC was Toyota biased (I’ve read for quite a while), and I definitely share my dislike for the company’s direction every chance I get.
It’s kind of fun to poke at them honestly, and I do genuinely believe that their retreat to dull and cheap is a major change, and one that could have long consequences if not corrected. It’s also, obviously, something that the company can fix, and hopefully will. Another obvious fact is that Toyota is in no real danger right now, and will not be allowed to fail in any case. So TTAC is correct in it’s editorial stance as far as I’m concerned.
I’ll have to do some digging. Last I heard Toyota had a 4 trillion yen war chest. I don’t trust these new numbers.
Even a slight squeezing of every other auto maker’s business model is resulting in pain, yet in a financial race to destruction, most would agree Toyota would be the last standing?
Questions of “how much” left in reserve is really a relative question is it not? The absolutes aren’t really that important, it’s a mater of how much more than their competitors.
Toyota, BMW, Porsche and VW say they have cash (lots), everyone else is negative or is spending money they have raised from hocking the jewels.
While paddling downstream, the waterfall drop is coming, but some guys are still upstream and in control.
John McElroy’s blog at AutoLine titled “Toyota’s Weakening Financials” is pretty lame. He’s making a big deal about Toyota’s cash reserves, saying that Toyota reported cash reserves of $18.5 billion, which he says is about what Ford reported. That shows, he says, “it’s surprising to see how close the company [Toyota] has come to the edge of the cliff.”
But the financial statement he looked at is for Toyota’s second quarter of fiscal year 2009. Those statements go through September 30, 2008 (like all Japanese companies, Toyota’s fiscal year ends on March 31). That financial statement shows cash as high as it has ever been. Cash on hand did not drop to $18.5 billion. It grew to that number.
And that financial statement has been available since November 13, 2008. He makes as if Toyota’s cash position is new news. It’s not.
Lots has happened since September 30, 2008. The value of the yen has soared. Toyota’s sales have dived. As we all know, Toyota announced its forecast of an operating loss for fiscal year 2009. The first operating loss in its history.
All that has to have hurt. No question Toyota’s financial position has weakened. We will not know how much until Toyota posts its third quarter numbers (through December 31, 2008) in mid-February and its 2009 fiscal year-end numbers in May.
For John McElroy to claim that he saw this weakness in the fiscal year 2009 second quarter numbers, though, is silly. They do not show it. Not at all.
From everything that has been announced by Toyota, their cash and cash equivalents are indeed at about 1,850 billion yen. But their liquid assets, which I think is the more important number, were reported at over 4,000 billion yen.
Sure, Toyota’s forecast operating loss will pull that number down. But Toyota’s last forecast was for an operating loss of 150 billion yen. That’s not going to be hard to cover. It’s less than 4% of Toyota’s liquid assets.
Unless I’m missing something here, John McElroy misinterpreted stale numbers to draw an unsupported conclusion. Toyota has its problems, but it’s much farther from the edge of the cliff than Chrysler, GM and Ford. Much farther.
The article suggests toyota had about 90 billion dollars of cash on hand at the end of 07. Today, a mere 13 months later it now has 18.5 billion. That figures out to be an average of 5.5 bil per month cash burn.
With no union labor and legacy costs, thats amazing.
I encourage all the toyota faithful to follow Roberts lead and continue to believe this is no problem and simply kill the messenger, in this case autoblog.
If this turns out to be true however, it will be the biggest auto story of the year. It will certainly explain why toyota cleaned house of their top management last week. It clears up the “4th quarter profit loss of a billion story”. It sheds light on why the Mississippi prius plant was stopped. One can now wonder if it was “just a rumor” about potential layoffs pending. Nevermind their 2009 projected production cuts of 25% which were announced recently. Ignore the stock value drop from $122 to $60 in the past year. And it being the company with the most product recall in the year ending 08 I’m sure is just being silly to think something could be wrong.
So, just move along people, there’s nothing to see here, keep it moving. We simply can’t find a way to turn this into another one of those exciting stories of how GM screwed themselves and not about a worldwide depression in the industry or a credit crisis story.
However, it’s possible one could, just maybe see this as not a “wildly disingenuous” story. But instead see it as the “number 1 car company in the world” is listing profusely, taking on water and is in much deeper financial trouble than what has been reported.
When you have 71.5 billion dollars go up in smoke inside of a year from a company that supposedly was making hand over fists profits, and sales of cars that “everybody” wants, could this turn out to be a currency manipulation story? Talk about getting caught with your hand in the cookie jar. Or maybe a cooking the books story, SEC investigation anyone? Hmmmmm…perhaps we should stay tuned.
Who the hell would think TTAC is pro-Toyota???
The truth hurts sometimes.
Indeed the truth does hurt.
I may be “pro Toyota” at the moment, only because I haven’t had nearly the problems as I have with my Pontiacs, Chevrolets, Oldsmobiles, and Dodges.
And I’ve had my very complex Prius for almost five years now. But I’ve had great experiences with Mazda and BMW.
But I don’t want TTAC to be “pro Toyota” (or pro-anything, for that matter), and I don’t think they are.
So there!
Dealmaker, after I read your post, I took a look back at the Autoblog story by Sam Abuelsamid. I had just skimmed over it before, moving quickly on to look at the more concrete numbers in John McElroy’s blog. I had not noticed Autoblog implying that Toyota’s cash numbers had gone from $90 billion to $18.5 billion in 13 months.
But you’re right, they did imply that. And that would be surprising if it had happened. But it didn’t. At least not in this universe. Perhaps in an alternate one.
And Sam Abuelsamid said that John McElroy said that Toyota has “rapidly spiraling debts.” Well, yes, McElroy said that “Toyota’s borrowing and have debt load more than doubled over the last decade. In 2000 Toyota’s current liabilities totaled ¥5.5 trillion, right now that stands at ¥12.4 trillion.”
That might have some meaning if you did not notice one thing, as McElroy apparently did not. Toyota’s revenues also more than doubled since 2000. As did its earnings.
Toyota’s borrowing and debt load are far from spiraling. You would expect them to grow as Toyota grew. It would be unusual only if they did not.
I’m not defending Toyota. I have never owned a Toyota car, and don’t think I ever will. Nor have I ever owned any stock in Toyota. (Yes, the price of their stock has fallen, but look at their market capitalization. It was still over $100 billion last time I checked. How does that compare to GM? Oh, that’s interesting. It’s at $2 billion.)
But I am defending truth. If you are going to write about the financial position of a company, and you are not shorting or touting its stock, you ought to provide information that has at least some relation to the truth.
But oh, I forgot, Autoblog and AutoLine don’t give us the truth about cars. That’s TTAC.
It’s not so much an anti-Detroit bias on my part as an anger or frustration. The sort of frustration you feel towards a younger brother who has the ability to do great things but who keeps making bad decisions. I WANT Detroit to succeed, if for no other reason than to show my Japanese inlaws that American cars are better. But I can never bring myself to trust Detroit. Yeah, I admit it, I read Consumer Reports. I don’t care about the first year results, I look at the black circles after the cars have been on the road 2 or 3 years. Detroit cars are never quite there.
But recovery is always just around the corner… It’s been that way since 1970 and the Vega, but Lucy always keeps snatching the football away.
Sure, there’s the CTS, but what else? Don’t talk to me about the Volt – it’s already a failure. What’s the advantage of owning a Volt over a Prius or a hybrid Honda at half the price?
Ford, I have hope for. I like their new products, but I was around in the 1980’s when they introduced the Taurus. They had religion then too. The Taurus was a great car with great potential, but with its success, Ford lost their religion and went back to drinking the Kool-aid.
I almost bought one, but I decided to wait a few years… and I was glad I did. They didn’t fix the early problems of the Taurus, nope. They quit improving the Taurus and slid bad into their bad old ways. So, I think I’ll wait a couple more years this time too.
Chrysler? Read American Motors. Sold and resold, like a corpse parted out for medical experiments.
I don’t particularly like Toyota … I’ve owned a couple over the years. If GM is my failing younger brother, Toyota is my boring and annoying cousin, the accountant. Dull to drive, expensive tto repair, I won’t buy another one until I’m too old to drive anyhow.
But that doesn’t make me into a Detroit fan. I drive German right now, with my eyes wide open. Sure, there are just as many problems as detroit cars, but the driving experience is better and the parts I touch every day are nice quality – and when it comes time to sell, I get most of my money back. I think it’s cheaper to drive German than Detroit, and I have a better time doing it.
So, pro-Toyota… not particularly. Anti-Detroit?
Yeah, until they quit drinking and stay sober – for more than a year. I’ve seen them swear-off the bottle two or three times in my car-buying life time…. and maybe it’s true this time, but I’ll wait a few more years, thanks. If they’re out of business by then, so be it. I’m not making the decision not to buy their cars for anybody but myself.
Oh, and I heard the patriotism spiel in the 80’s, thank you. Detroit has had 30 years since then to get the act together. Well, they decided to wait until the hangman was approaching…. again … to swear off drinking (it was an SUV bender this time) ….
Hope the Liver transplant my tax dollars are paying for helps, but that doesn’t mean I’m going to buy something from them till their hands quit shaking….
OK.
/Rant Off
Pro-Toyota? Very funny.
I’ve been reading this site for several years and have noticed “biases”, but not that one. The most consistent themes I’ve seen are the following:
1. LOVE for the Ford Panther platform.
2. Much love for the Mazda 3.
3. General all-around good feelings for the BMW 3-series.
4. Anger at the ball-dropping on GM’s part.
5. (Well earned) disdain for anything Chrysler.
6. General thought of anything Toyota (and, pretty much Honda as well) as vanilla. Yes, yes, the best selling ice cream flavor IS vanilla, hence their success.
People on this site have consistently dinged Toyota for having the “green” image as a result of selling the Prius while in reality selling some of the worst gas guzzlers on the road. All in all, I think the site acknowledges the MSM pro-Toyota bias while remaining independent.
Keep telling the TRUTH, Robert, et.al.!
tesla deathwatcher–thanks for clearing things up.
At one point Japan’s accounting standards were much more lax than those in the U.S. If this remains the case, then Toyota has quite a bit of leeway in the numbers they report.
My gut feeling has been that Toyota is actually tweaking its accounting to exaggerate its loss. It’s a good time to take a loss–people aren’t as shocked as they would be in better times. And by taking a loss they:
1. Can call on employees to make sacrifices
2. Declare larger profits later
Toyota has gotten where they are by running lean. The recent belt-tightening moves show that they don’t need a lift-threatening crisis to react properly.
Oh, here’s “perception gap,” defined:
rcory :
….Typical comments similar to “my uncle’s 97 Jimmy was junk, ergo all new Detroit cars are junk” or “I rented an Impala back in ‘05 and the front end got out of alignment when I hit the curb….
No, sorry, but the “wouldn’t touch a domestic vehicle with a ten-foot-pole” mindset doesn’t come from a couple of ancedotes — it comes from the systematic lack of quality the domestics have shown for decades. It’s the proverbial “years and years and years and years of solid black dots in Consumer Reports reliability ratings.” Utterly decade after decade of absolutely miserable performance. And all backed up with mountains of anecdotal evidence, if you want to call it that — friends, family, co-workers moaning about getting stranded on the open road, replacing transmissions, paint literally falling off their cars, and on and on.
So, anyway, “talk about perception gaps.” I think TTAC has been pretty spot-on with the coverage that we’re really talking about here — how these companies are performing financially. And what, if anything, these companies are likely to do in an effort to improve their financial results. I think it’s a quite interesting subject, and I sure think TTAC’s coverage has been clear and quite accurate.
I think the only way Toyota will go bankrupt is by making stupid mistakes over and over, never admitting anything was a mistake, and never taking any corrective action to try to recover from the mistakes.
Since Toyota has shown that it knows how to take corrective action when it posts a loss, I think they’ll be around for a while unless all of the boring people suddenly decide they don’t need a car.
And TTAC is not pro-Toyota. However, TTAC is anti-crappy car companies.
There is no perception gap as long as we all get to ‘enjoy’ Detroit’s offerings at the rental car counter on a regular basis. Last year, there were 2 months I put as many miles on a rental (Aveo and Cobalt) as I did on my own Prius.
TTAC pro-Toyota? Rubbish! Actually some of the reviews of ToMoCo products leave me with the opposite feeling, no offense intended to anyone, this site being about the truth and all.Disclaimer: my daily driver is decade old Toyota. I also have an Olds Toronado for weekends and an F-150 workhorse.(No Bias here!)
Let’s look at Toyota’s situation from another angle. Toyota says it will lose $1.7 billion for the fiscal year – doesn’t seem too onerous until you consider what they made the first two quarters of their fiscal year (these numbers are straight from Toyota’s website). First quarter operating income was 412.5 billion yen, or $3.8 billion at the exchange rate quoted for Aug. 5. Second quarter was 582 billion yen, or $5.9 billion at the exchange rate of Nov. 7. This means that in the process of wiping out those profits and adding another $1.7 billion, Toyota will lose around…….$11.4 billion for the November through March period. Folks, those are losses that rival Detroit’s, if not surpasses them. And a 1.4 million car recall can’t be helping matters any. As far as this website being pro-Toyota, I would say that is probably unfair, although the B&B seem to be slanted in that direction.
That’s a good point, gm-uawtool. One that I hadn’t thought of. And one that may explain a lot of the panic in Nagoya.
First off, I want to see some cold hard facts. The fact that some of you believe Autoline and Autoblog is ridiculous. Where are the Toyota financial statements showing they went from 90 Billion in cash reserves to 18.5 Billion? I don’t believe a word of this, since Autoline and Autoblog are famous for coming up with anti-Toyota drivel that has little to do with facts and reality.
Also gm-uawtool, a big part of that money loss for Toyota will be due to the yen’s value. That is something out of Toyota’s control for the most part. Furthermore, Toyota estimates that loss. Toyota has NOT YET actually posted that loss. Toyota could easily be providing an exaggerated estimate only to shock and surprise everyone with a smaller loss or even a small profit when they report their numbers in a few months.