Toyota’s May Performance Supports Company’s Sanguine Outlook

Toyota Motor Corporation’s (NYSE:TM) strong performance in May led by the U.S. and China markets confirmed that the company’s recovery is on track. The sales had shrunk last year due to the tragic Japanese tsunami and earthquake which impacted production. Toyota forecasts its profit for fiscal 2013 (i.e. from April’12- March’13) to be around 760 billion Yen (or $9.6 billion USD). The company regained its position as the world’s largest automaker after its first quarter sales beat that of General Motors. ^[1]

We currently have a $93 price estimate for Toyota’s stock, which is about 20% above the current market price.

See our full analysis for Toyota’s stock here

Toyota Shines in North America and China

Toyota sales in the U.S. rose 87% in May 2012 compared to the same period last year. The company sold 202,973 vehicles in the U.S., which is 14% above its April’s total. Total U.S. car sales grew 20% in May on a y-o-y basis. Toyota sales were boosted by strong performance by Prius hybrid. The new Prius C is off to a strong start as well. Strong Prius sales in the first three months of the year in the U.S. and Japan ensured that the vehicle was the world’s third best selling car. ^[2] Similarly, Toyota’s Canadian sales jumped almost 65% to 19,810 units for the month. ^[3]

In China, Toyota sales doubled to almost 79,000 for May. The company’s total vehicle sales for the first five months of the year in China have jumped 26% to 372,000 vehicles. ^[4]

Threat From GM Volt

General Motors has been able to increase the efficiency of its 2013 model of Chevrolet Volt plug-in-hybrid. The car will now be able to travel 38 miles on a single battery charge, compared to 35 miles for its current version. Besides improved efficiency, the car also features a ‘hold’ mode which allows the users to switch to gasoline before they use the electric battery. Sales for Volt have more than tripled to 7,057 in 2012 so far, topping 3,638 plug-in Priuses. ^[5] Although the total sales for electric cars are only a minuscule of  their total sales, the segment holds the key for car makers, as these cars are eligible for tax credits and consumer interest in electric cars has grown significantly due to rising gas prices.

Understand How a Company’s Products Impact its Stock Price at Trefis

1. Toyota Motor overtakes General Motors, regains number one spot, theeconomictimes.com, May 22, 2012 [↩]
2. Toyota, Chrysler lead strong May auto sales, cbsnews.com, June 1, 2012 [↩]
3. Canadian auto sales spike over 2011 levels, winnipegfreepress.com, June 2, 2012 [↩]
4. Toyota China sales double in May from a year earlier, straitstimes.com, June 1, 2012 [↩]
5. GM Volt Beats Plug-In Prius, Leaf in U.S. Rechargeable-Car Sales, businessweek.com, June 1, 2012 [↩]