Toyota (NYSE: TM) has already said that 2008 will be a bad year. Now it has revised down its sales numbers for 2009. The cut is about 7% and takes the company's estimate to 9.7 million vehicles sales orldwide.

The news may be bad for Toyota, but the company has a good balance sheet and has maintained a low cost base for years. Europe and North American is where the Japanese company said it is sustaining the most damage. According to The Wall Street Journal, the firm is "bracing for a long slowdown as robust sales to developing markets are failing to offset huge losses in the crumbling U.S. market."

For General Motors (NYSE: GM) and Ford (NYSE: F) the news could not be worse. Both rely on the U.S. market for the lion's share of their sales. Both are counting on some recovery in 2009 to allow them to stop the bleeding out of cash that threatens their abilities to remain independent and solvent.

The two U.S. car companies were going to go to the capital markets to raise money. Whether debt or equity investors would give them money becomes more problematic as each month of poor sales goes into the record book.

The government is talking about a $50 billion bail-out for U.S. car companies. That may be the only capital they can get.

Douglas A. McIntyre is an editor at 247wallst.com.

Read | Permalink | Email this | Linking Blogs | Comments

Read | Permalink | Email this | Linking Blogs | Comments

An interesting quote in The New York Times from Tetsuo Iwamura, the president of Honda's North American operations, sheds light on how Honda has managed this impressive feat. Honda, Iwamura said, "is a philosophy-driven company." And what is Honda's philosophy? According to Iwamura, "we want to make Honda the company that society wants to exist."

From an American perspective, this is an extraordinary statement. American automakers have followed a very different philosophy for many years, one in which fat and easy profits from poorly designed and hopelessly wasteful SUVs take precedence over the long term health of both the auto industry and society as a whole. But Detroit is suffering now for its short-term approach, while Honda is showing both consumers and investors the value of planning for the long run. And at $32 a share and a P/E of 10, Honda looks like a good long-term buy.

Permalink | Email this | Linking Blogs | Comments

Permalink | Email this | Linking Blogs | Comments

What's the deal here? The energy bill from 2007 allows for low interest loans to create next generation technologies for energy efficiency. The auto makers want to press Congress hard for their share when the summer recess is over...and certainly before the election. The auto makers say they need $50 billion to be competitive again.The rub as some see it is the desire of the auto makers asking for twice the amount that has been earmarked for such projects. Why not, asking for twice the amount right now is opportunistic as politicians are running for re-election and want to hang their hats on any good issue that will save jobs and create goodwill.

Is this the last chance for struggling GM and Ford? Both auto makers have lost their respective standing in the world as premier manufacturers--that took 30 years to happen. Combined, Toyota Motors (NYSE: TM) and Honda Motor Company (NYSE: HMC) have a market capitalization of $257 billion, 17 times the combined value of GM and Ford at $16 billion. It appears both GM and Ford are intent on offering the latest and greatest in hybrids and other fuel efficient autos, but will need massive re-tooling of plants and processes. To become game-changing type companies in the future, it is an absolute necessity. To compete once again, it will be based on profitability per vehicle sold rather than the raw units sold as GM once boasted proudly of being number one in the world. Number one got them nowhere and Toyota proved that fact.

As these two lobby Congressional lawmakers with hat-in-hand, I doubt if many members of Congress full appreciate the huge financial lead that Honda and Toyota carry over our two American brethren. The national conscience appears ready to help out the beleaguered auto makers especially as they want to offer the best in fuel efficient autos and light trucks.

If Congress is feeling generous, why not ask for $100 billion?!!...

Georges Yared is the editor of GameOnInvesting, a free service devoted to helping investors spot game-changing stocks before they breakout.

Permalink | Email this | Linking Blogs | Comments

General Motors (NYSE: GM) and Ford (NYSE: F) want you to pick up their tab for their decades of excess and managerial incompetence.

The Associated Press reports that the Detroit automakers are likely to ask Congress for $50 billion in low-interest loans to fund modernization efforts, and help them build more fuel-efficient vehicles.

What a load of crap. In 2007, Ford paid cash-burning CEO Alan Mulally $21 million, and GM's Richard Wagoner got a 41% raise to over $14 million for the same year. In effect, our tax dollars will be subsidizing this pay for pulse orgy of bad governance. GM also paid out more than half a billion in dividends in 2007 -- if the company needs billions to invest in modernization, why didn't it cut the dividend a long time ago?

It appears that the auto industry has been counting on a bailout all along, and why not? It looks like they'll be getting it.

Permalink | Email this | Linking Blogs | Comments

The Big Three seem to think that they are troubled money center banks. They want Washington to get them out of their financial problems. According to The Wall Street Journal, "Battered by high gasoline prices and weakened earnings, the Big Three auto makers and their suppliers are now seeking significantly more help from Washington in the form of government-backed loans than the $25 billion they had previously been authorized to receive."

While the auto companies are important to the U.S. economy, they can be "replaced." If General Motors (NYSE: GM) or Ford (NYSE: F) fail, their brands and manufacturing facilities will almost certainly be bought by an overseas car company. VW has said it would like a larger market share in the U.S. So has Nissan. Both have the balance sheet to buy assets from a failed U.S. car company.

There is a sort of cruel reality to the thought that companies considered pillars of the U.S. economy could be gone sometime soon. It is certainly an indication that manufacturing is become less and less critical to the overall GDP of America. It is also a sign the the inefficiency of Detroit's habits have finally gotten so severe that it needs to turn to the government and not the capital markets for aid.

If the car companies cannot make it and cannot raise money on their own, they should be allowed to fail. That may mean that Toyota (NYSE: TM) will become the largest seller of cars in the U.S., but there was never any rule that said bad management would continually be rewarded.

Douglas A. McIntyre is an editor at 247wallst.com.

Permalink | Email this | Linking Blogs | Comments

I know, I know: forecasting the imminent demise of America's car companies is nothing new, but recent events have highlighted the kind of shortsighted planning that has plagued Ford Motor Company (NYSE: F) and General Motors Corporation (NYSE: GM) for years. While the gas crisis has exacerbated the shortcomings of the automakers, the companies' failures to understand their core audience, invest in R&D, and ensure the quality of their finished product are long-term, endemic problems that make them a very questionable bet.

Recently, for example, General Motors' decided to offer incentives, extended protection plans, and employee pricing to draw buyers to the line; these innovations, however, have had the added impact of massively undercutting revenues. As Williams-Sonoma could now point out, slashing your profit margin is not really the best way to make a profit. While their decision to get rid of Hummer should help GM shed a pricey and currently unpopular line, by the time the sale is finished, gas prices will be back down and everybody will be driving hydrogen-powered cars.

Ford, meanwhile, has decided to focus its attention on cars, a long-term plan that doesn't seem very well thought out. While the Mustang is, perhaps, Ford's most famous model, their trucks have long been an iconic symbol of the company. Rather than invest in making their strongest sellers more fuel-efficient and thus more attractive to consumers, Ford seems to be placing its eggs in a somewhat unreliable basket.

Of course, reliability is another issue entirely. Ford's greatest problem lies in the questionable quality of their cars. Having driven a "Fraud" Mustang for a few years, the best thing I can say about the car's quality was that it was easy to repair, which means that I generally just had to pay for parts. Since then, I've watched as the brand has repeatedly been plagued with reliability issues, the latest of which was the Explorer/Firestone tire scandal.

Another problem is the (somewhat justified) perception that American cars are unreliable, poorly-designed gas guzzlers. They cost more than their overseas counterparts, and are usually a few years behind on engineering. This, in particular, has been highlighted by the recent advances in hydrogen cars: while Honda's FCX Clarity fuel cell car is out this summer, GM doesn't plan to unveil theirs for another two years and, although Ford's fuel cell vehicles have gained near-legendary status, they still aren't being offered for consumers.

While it will be a while before hydrogen cars will be a major market force, it's already pretty clear that the United States will, once again, be playing catch up in a strategic part of the automotive industry. In the meantime, rather than improve the quality of their engineering and reduce the gas consumption of their top sellers, Ford is dropping its truck line. With decision making like this, it it any surprise that foreign car companies are dominating America's roads?

Permalink | Email this | Linking Blogs | Comments

Permalink | Email this | Linking Blogs | Comments

One of the few hopes the U.S. car companies have had is that they have been perceived as closing the quality gap with Japanese models. Recent JP Power data shows Detroit running in a dead heat with imports in the consumer satisfaction race.

That bubble has been at least partially burst due to new information from the University of Michigan's American Customer Satisfaction Index. According to the AP, "U.S. car buyers are growing less satisfied with their purchases from domestic automakers while their Asian and European competitors continue to improve."

In the new survey, BMW and Lexus tied for the top spot followed by Honda (NYSE: HMC) and Toyota (NYSE: TM). Several brands from GM (NYSE: GM) and Ford (NYSE: F) dropped down the rankings.

At the risk of stating the obvious, Detroit is in such deep trouble that a perceived drop in the quality of its cars can only make its recovery more difficult. There are several ways around that, but none of them are very palatable.

GM yesterday introduced buyer incentives across most of its brands. That means its margins on those vehicles will be lower. It may pick up some market share, but any victory there will be costly. The U.S. car companies are cutting their marketing budgets, so they cannot "advertise" their way out of the problem.

Effectively giving cars away can certainly help hurdle the quality barrier, but losing a lot more money could sink a large U.S. auto company.

Douglas A. McIntyre is an editor at 247wallst.com.

Read | Permalink | Email this | Linking Blogs | Comments

Daimler AG (NYSE: DAI) closed at $59.55 Monday. DAI overall option implied volatility of 35 is near its 26-week average of 33 according to Track Data, suggesting non-directional price movement.

Ford (NYSE: F) closed at $4.89 Monday. F overall option implied volatility of 78 is above its 26-week average of 69 according to Track Data, suggesting larger price movement.

General Motors (NYSE: GM) closed at $10.36 Monday. GM September call option implied volatility is at 87, puts are at 103; above its 26-week average of 72, suggesting larger price fluctuations.

Honda (NYSE: HMC) closed at $33.42 Monday. HMC over all option implied volatility of 33 is near its 26-week average, suggesting non-directional risk.

Toyota Motor (NYSE: TM) closed at $90.75 Monday. TM overall option implied volatility of 29 is near its 26-week average, suggesting non-directional price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Permalink | Email this | Linking Blogs | Comments

Read | Permalink | Email this | Linking Blogs | Comments

Permalink | Email this | Linking Blogs | Comments

Ford (NYSE: F) will stick to its plan to become less of a truck company and more of a car company, even if oil prices stay relatively low. According to Reuters, "A decline in gas prices would support consumer confidence, but customers still face job risks, potential financing difficulties with tight credit markets and other factors and it would not change Ford's planning assumptions."

Ford hurt itself with its last "all or nothing" gamble, and it could hurt itself with this one. Going to extremes has done little for Ford over the last decade.

The demand for small cars is not likely to change. It is hard to imagine gas prices going below $3 in the next year. Crude seems to have set a floor above $110 a barrel, which is still very high compared to 18 months ago.

But Ford has the brand image of being first in bringing the consumer high-quality pickups and SUVs. Its F-150 truck has been the top selling vehicle in the U.S. for a number of years.

Ford has to be careful it does not let the pendulum swing too far away from its current core business. In a couple of years, the market may change again. Use of alternative energy could help inch gas prices down by 2010. Ford can't afford to be caught flat-footed again.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Read | Permalink | Email this | Linking Blogs | Comments

Read | Permalink | Email this | Linking Blogs | Comments

This post is one in a series on prominent company nicknames. See all 25, and share your thoughts and memories about Ford below in the comments.

I didn't grow up in one of those families that placed a high premium on American-made goods. If the Japanese can make it better, we'll buy it from them! was the general consensus. And those foreign autos served the Harrows well. My parents bought their 1984 Toyota Tercel when it was new, and that unattractive but reliable compact was part of the family through the beginning of my college career -- even surviving my first, hilarious attempts to operate a manual transmission. So, it wasn't until I moved in with my friend Debbie, as an adult, that I learned the details behind a particularly unflattering nickname for the Ford Motor Co. (NYSE: F).

There are those who would joke that the letters in "FORD" stand for "Fix Or Repair Daily." I know from experience that if you make that particular wisecrack within Debbie's earshot, she probably won't crack a smile. Instead, you can almost see her wheels churning, as though she's trying to calculate the thousands she's already poured into her Ford Focus -- or maybe she's just trying to predict which part will break down next.

During the time we shared a mailbox, it was a not-out-of-the-ordinary occurrence for Debbie to receive recall notices bearing the familiar Ford logo. These repair-o-grams arrived with such frequency that the exact number now escapes my memory; when I questioned her via text message, she replied, "I have had six. Stupid car."

Of course, some would argue that this speaks more to the peril of buying a new model the first year it's released (which she did). Others might suggest that her car is simply cursed. While parked outside our apartment, which faced a busy thoroughfare, she lost at least two rear-view mirrors to drive-by sideswipers, while I lost none. Her Focus was also the victim of a break-in, wherein she was robbed of a half-used Diet Pepsi and less than a dollar's worth of change.

My ex-roomie's jinx aside, Ford has been endlessly chagrined by the old "fix or repair daily" chestnut. As proof of its widespread acceptance and usage, even among the upper echelons of the financial media, the nickname was used by Forbes as the headline of a critical 2001 story about the automaker. (On the plus side, the magazine politely side-stepped the car company's more offensive nickname: "found on road dead.")

In fact, Ford itself has admitted to quality issues -- albeit obliquely. Perhaps you caught the company's recent advertising campaign, which boasted that a recent survey (sponsored by Ford) found Ford's quality to be on par with that of Toyota Motor (NYSE: TM). I'm no marketing exec, and so I'm not sure what reaction the ads were meant to elicit. For the record, my own take was something along the lines of: Really? Wow, and it's only 2008. Good hustle, gang! That is to say, the campaign may have done more to underscore Ford's years of underperformance, rather than highlighting its current achievements.

And, despite the promise of improved quality, there are still millions of blue oval-bearing automobiles on the road that suffer from those familiar old quality issues. A recall was issued on more than 12 million Ford cars in August 2007 after it was found that the cruise control system was -- how to put this delicately? -- highly likely to catch fire. Parts to repair the faulty system were made available just a few weeks ago, as if to drive home the brand-newness of Ford's dedication to quality.

While Ford execs may not be fond of motorists' cheeky nickname for its autos, it's hard to argue that the company's explosion-prone fleet doesn't deserve a wee bit of flak. And, hey, things could always be worse -- Fiat has been slapped with a moniker that's similarly insulting to its cars, but ups the ante by adding an ethnic slur to the mix. Ahhh ... American ingenuity at its finest!

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the weekly video series Option Basics on SchaeffersResearch.com.

Permalink | Email this | Linking Blogs | Comments

Permalink | Email this | Linking Blogs | Comments

Permalink | Email this | Linking Blogs | Comments

Read | Permalink | Email this | Linking Blogs | Comments

Permalink | Email this | Linking Blogs | Comments