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Uh Oh the world is ending – Toyota has a 0% Financing Offer
Time for investors to bail out Toyota? By no means, not yet anyway. Even if Toyota’s earnings drop by fifty percent this year, Toyota operating profits are still likely to be around $10 billion. And with a strong balance sheet, and in excess of more than $20 billion in liquidity, and a barn full of new car initiatives, Toyota is in a better position than other automakers to survive economic storm. “When the Toyota executives finally make the decision to do something, they can go ahead and do it without having to arrange financing,” says Andrew Phillips, an analyst at KBC Securities in Tokyo.
For now Toyota’s problems seem minimal in comparison with the Big Three’s and it’s trying to make sure it stays that way. Toyota’s huge cash reserves will help it quite a bit especially in the U.S. here, it’s using three billion in cash at its U.S. financing division, as of the end of June to help with falling sales. Facing an ever more severe slowdown and growing stockpile of inventory, Toyota on Oct. 3 started offering for one month interest-free financing on 11 models, including the Corolla, Camry, and Tundra full-size pickup. And I thought I would never see that. The risk, say critics, is that 0% financing could hurt the Toyota brand car-resale values and hurt the brand if the company decides to extend the offer further.
Toyota is also taking drastic steps at its North American factories. After opening a plant for big Tundra pickup trucks in San Antonio in 2006, the company has since all but stopped production. It also has temporarily suspended production at three U.S. plants for three months in August to retool them so there’s more emphasis on smaller, fuel-efficient models. (It’s not letting go of the 4,500 workers, though; they’re keeping busy by doing everything from training programs to filling in at assembly lines in other areas or volunteering in their local communities.
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