Toyota global sales up 2.2% in Aug. on solid US demand
Ideas:
Perhaps in August sales were not affected by the tariff situation yet, as maybe companies either hasn't seen the tariffs and or have begun to absorb some of the tariff costs.
The Toyota Motor Corp. is a major economic driver of the Japanese economy and especially with exports to the US as either the largest or second largest economy in the world next to China.
Most likely, as the Toyota Motor Group is one of the largest auto companies in the world and probably has enough resources, if needed, to absorb the tariffs, but most likely they will deflect some or all of the tariffs to their auto dealers in the US and make the US dealers deal with the tariffs.
The reason for deflecting the tariff is to keep shareholders happy and make sure the profits and earnings are where shareholders want them to be and force the dealers to handle the tariff situation.
But that might be less sales in the US but it might not be a problem for the Toyota Motor Group as they might only be concerned with overall export sales to dealers in the US.
Car sales in the US might still be somewhat elastic or even inelastic meaning price may or may not be a major consideration for US consumers.
And it might be dis-heartening for T as imports from Japan continue to pour into the US as T is trying to reduce the trade deficit which is kind of like putting your finger into a leaking dike as the trade deficit is never going to be reduced as the US economy is just too big of an economy to go without imports from other countries.
As long as there is robust demand for Japanese car, especially Toyota cars, Toyota doesn't need to worry that much about the tariff situation.
Yes, Toyota might see a slight drop in sales, eventually, and a slight drop in earnings, eventually, but Toyota might not be too concerned at this point.
The electric vehicle market in China is big and getting even bigger as there are a lot of Chinese companies now in direct competition with Japanese cars in China.
And Chinese government is trying to go all out to reduce car related pollution with the push toward environmentally friendly vehicles and many Japanese and European car dealers are making more cars that are environmentally friendly now.
This is a good example of how inter-connected the supply chains for car manufacturing is globally as tsunami warnings in or near Russia, whether car parts produced there or not, can cause ripples and delays in the supply chains for example from manufacturers in Hokkaido in the northern part of Japan.
Cars, much like smartphones have thousands of miniature parts and can potentially be produced anywhere in the world which makes the supply chain efficiency even more important these days.
Its much easier to produce in the US, not because of the tariff situation but because of the significant increase in shipping costs these days from Japan to the west coast of the US.
The decrease in production in China might be related to the competition of Chinese car manufactures gaining more of the Chinese market related to electric cars as the Chinese government probably give Chinese car makers subsidies to manufacture and sell electric cars now.
Yes, the certification scandal related some of the subsidiaries of the smaller car makers with Toyota might have slowed down production and the sales of the smaller car manufacturers but not seem to be back as full strength.
Nissan has dug itself into a huge hole and it's going to take some time before it can navigate itself out of the challenge its in now. It might see its sales and profits decrease for a year or two but once it sorts through the mess it should come out it with fewer problems.
And yes, Nissan too has taken advantage of the trend in China for more electric vehicles so they too has seen sales increase there.
Maybe the glory days or boom days or years for Japanese car manufacturers are over as more and more car manufacturers globally are making better cars that consumers globally want and need.
China, Indonesia, and Malaysia have growing middle class consumers who are looking for the best cars they can find and are not satisfied, these days with any of the cheaper cars that car makers might have given them in the past.
It's interesting that Japan has so many car manufacturers as it might have seven or eight companies but some of the smaller companies might actually be subsidiaries of the large companies of Toyota, Nissan, and Honda.
Its worth noting that that the larger car companies didn't resort to a zero sum game or force the smaller car companies out of business, as it seems the larger companies might have absorbed the smaller companies into their overall company portfolios.
This seem to make good business sense as why do companies force other companies out of business when it might be better to bring them into the larger company group and find ways to improve business for all concerned.
But the corporate structure and mindset of Japanese businesses and US businesses is much different as in Japan, companies might focus more on cooperation while in the US its an all or nothing approach especially when it comes to shareholders and what they want.
Every car market, globally, is going to have its ups and downs as some markets, such as the US might grow a lot in a quarter or year, while a market such as China might its grow be up and down depending on what the Chinese government it doing from day to day with relation to subsidies.
The positive side is when one market is down its possible other markets might be up, so its good for Japanese car companies to be in as many markets as possible with efficient supply chains for the markets and the car manufacturers.
Have a nice day!
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