Is There Reason to Be Cautious About Toyota?

Toyota U S A Headquarters exteriors, Torrance, Ca.

It was a great week for Toyota Motor Corporation (NYSE:TM). After announcing it profited at near-record amounts in the second quarter of 2103, Toyota stock was up over 6 percent during Friday trading in New York. The automaker pounded rivals such as General Motors (NYSE:GM) with its currency advantage and outstanding July sales, yet there were cautious tones coming from corporate headquarters.

Investors loved the numbers Toyota released, and it’s hard to fault anyone for doing so. The company profited some $5.5 billion in the quarter, well more than three times the profit of the automaker’s U.S. rivals. The currency devaluation is cited as the cause for the wide disparity, and may account for as much as 80 percent of the profit increase, according to Reuters.

Nonetheless, the numbers released by Toyota were impressive. The company won July in the U.S., posting its fourth straight month as the top retail brand. It’s still winning big in the hybrid segment as well, sustaining the success of the Camry and posting great numbers for Lexus and its Tundra pickups. The news was plenty for investors to get behind Toyota, yet company officials preached caution.

Specifically, Toyota’s Managing Officer Takuo Sasaki spoke about the “uncertainties” facing the company in a news conference reported by Reuters. Sasaki was hesitant about overall growth when the market in Thailand was bad for Toyota. According to company figures, Toyota sales were worse in the second quarter when compared to last year, while the Thai market surged more than 20 percent.

Toyota was caught by surprise in the green car market, of all things, when noting the difficulty winning the day in Thailand. Sasaki told reporters it has a green car aimed at Thai consumers on its way later in the year, according to Reuters. The company certainly didn’t have trouble with its Prius division in the U.S.

Sales of the Prius family were up 40 percent in the best July ever for Toyota’s hybrid. The automaker sold over 23,000 cars in the Prius line and continued to dominate the hybrid segment, posting over 60 percent gains in its own family. Yet Honda (NYSE:HMC) was beating up on Toyota in Thailand.

According to Reuters, Honda’s Brio Amaze is turning out to be the fuel-efficient car Thai consumers prefer, whereas Toyotas have fallen into the background.

Toyota’s U.S. sales showed the pickup market was not only the stomping ground for Ford (NYSE:F) and its star F-150 line. Toyota increased sales in its pickup trucks 15 percent in July, with the Tundra posting 7 percent gains. The smaller Tacoma showed an impressive 15 percent uptick when compared to July 2012.

Toyota’s sales news, combined with the ongoing policy favoring its exports with respect to the yen, should allow the company to continue its reign as the world’s leading automaker and top U.S. retail brand. Despite minor concerns in Thailand, investors have little to fear with this highly profitable company.

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