What’s going on?
Toyota announced on Wednesday that it had sold a near-record number of cars in its past year, but the carmaker will need those acorns of success to get through the bitter winter ahead.
What does this mean?
Toyota’s sales have gone through the automatic roof, with the company selling a near-record 9.5 million cars in the past financial year. It posted the highest-ever operating profit for a Japanese company too, thanks to a rival-beating formula of cost-cutting measures. But the past is the past: the carmaker now reckons raw material prices will double this year from last, when they were already at an all-time high. That, the carmaker said, will drag its profit down by 20%, even as it expects to sell 13% more cars and continue to benefit from a weaker yen. And while Toyota is known for giving conservative forecasts, this one was outright Republican: investors sent its stock down 6%.
Why should I care?
The bigger picture: Everyone’s agreed, then.
Toyota’s acute pessimism is mirrored by industry analysts, who have been warning about the risks to carmakers in the next 12 months. Market research firm IHS Markit has downgraded its forecast for global vehicle production twice in as many months, based on things like the war in Europe, the fallout from Chinese lockdowns, and the languishing microchip recovery. Jefferies’ analysts, meanwhile, argue that still-high inflation and an impending slowdown in global economic growth might put would-be car buyers off altogether.
Zooming out: Shut up and don’t drive.
There are already signs that China’s drivers are stepping away: data out this week showed that car sales in the world’s biggest market fell 36% last month from the same time in 2021. That’ll happen when you lock down carmaking hubs like Shanghai, bringing production to a halt and keeping buyers out of showrooms…
Originally Posted May 11, 2022 – Ah Nuts
Disclosure: Interactive Brokers
Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from Finimize and is being posted with permission from Finimize. The views expressed in this material are solely those of the author and/or Finimize and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
In accordance with EU regulation: The statements in this document shall not be considered as an objective or independent explanation of the matters. Please note that this document (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and (b) is not subject to any prohibition on dealing ahead of the dissemination or publication of investment research.
Any trading symbols displayed are for illustrative purposes only and are not intended to portray recommendations.