U.S. automakers challenged by latest downturn.
on July 10th, 2008 at 9:46 amToyota’s agility challenged by downturn
Toyota Motor Corporation finds itself in the same boat as U.S. automakers with too many large and not enough small vehicles in production, car dealers said.
Toyota is known for quick reactions to market changes and for its lead in hybrid car sales, The Detroit News reported Wednesday. But the recent shift to smaller, more fuel-efficient cars caught the company off guard, some dealers said.
“They’re maxed out in production of Corolla and Camry cars in North America, and there’s nothing more the U.S. staff can do,” Michigan car dealer Rosario Criscuolo told The Detroit News after Toyota officials explained the company’s position last month in a meeting in Salt Lake City.
The company is “no longer considered immune” from shake-ups in the market, industry analyst Aaron Bragman at Global Insight told the News.
Toyota’s U.S. sales are have dropped 6.8 percent this year, the report said. Sales of the luxury Lexus brand have dropped 14.7 percent, while Tundra pickup sales have plummeted by 53 percent, the newspaper reported.
Analysts say GM may be short on cash
Financial analysts are asking whether the largest U.S. automaker, General Motors Corp., has enough cash to see it through the industry’s latest downturn.
As consumers flock to more fuel-efficient vehicles, General Motors has announced cuts in its workforce and plant closings, The New York Times reported Wednesday.
But, the consumer’s rapid change from large to small vehicles may force GM into a slump that runs deeper than its cash reserves can handle, some auto industry analysts say.
“GM needs cash to finish the job,” consultant John Casesa of Casesa Shapiro Group told the Times.
The company has $23.9 billion in cash reserves and a $7 billion line of credit, the Times reported.
Analysts estimate GM is losing $1 billion each month, meaning it would have enough cash to survive until the end of 2009.
Senior GM executives are not commenting on the company’s finances until a plan of action is made public, GM spokesman Tony Cervone said.
Industry analyst, Himanshu Patel of J. P. Morgan Chase, said GM may need to borrow $10 billion. But, Patel said GM has options. “GM is burning cash fast, but it still has many unencumbered assets that can be borrowed against,” he said.
