Here’s Why These Auto Parts Manufacturers’ Shares are Breaking Down Now

Toyota (NYSE:TM) is telling parts suppliers in Japan (NYSE:EWJ) to cut prices or the company will have to look overseas for cheaper options.  With the rising value of the yen, Toyota loses $443 million for every 1 yen (NYSE:FXY) appreciation—a loss they say they simply can’t afford.

The company is renowned for its close relations with suppliers based out of Japan (NYSE:EWJ), known as its Kyohokai (meaning “a group that cooperates with Toyota”).  Since 1943, just six years after the company was founded, the Kyohokai was formed and helped make the company what it is today.  Yet with the rising yen (NYSE:FXY), and the company’s production rates finally recovering from the recent earthquake, Toyota may have to sever its local ties with suppliers in order to stay afloat.

“Toyota committed to manufacturing at least 3 million vehicles a year in Japan, has ‘naturally’ favored its affiliated domestic parts suppliers,” said Hiroshi Ataku, an analyst with HIS automotive in Tokyo, in an interview with Bloomberg.  “The close ties may not last much longer.”

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Following is some stock price performance information on Toyota and auto parts manufacturing companies:

  • Toyota (NYSE:TM): The shares recently traded at $66.37, down $0.83, or 1.24%, on the day.  The shares have traded in a 52-week range of $65.30 to $93.90 and is trading at price to earnings ratio of 36.46. The share price maintains the dividend yield of 1.82 percent.  About the company: TOYOTA MOTOR CORPORATION manufactures, sells, leases, and repairs passenger cars, trucks, buses, and their related parts worldwide. The Company also operates financing services through their subsidiaries. Toyota Motor builds homes, produces pleasure boats, and develops intelligent transportation systems including radar cruise control and electronic toll collection systems.
  • Federal-Mogul Corporation (NASDAQ:FDML): The shares recently traded at $16.77, down $0.80, or 4.55%, on the day.  The shares have traded in a 52-week range of $14.11 to $27.20 and is trading at price to earnings ratio of 8.47.  Federal-Mogul Corporation maintains high profitability which is evident from its return on equity of 14%. About the company: Federal-Mogul Corporation supplies products, services and solutions to automotive, light commercial, heavy-duty truck, off-highway, agricultural, marine, rail, and industrial markets. The Company provides powertrain, vehicle safety, engine, sealing, steering, braking, service and other energy solutions.
  • Meritor Inc (NYSE:MTOR): The shares recently traded at $8.13, down $0.18, or 2.17%, on the day.  The shares have traded in a 52-week range of $6 to $22.65 and is trading at price to earnings ratio of 50.24.
  • American Axle & Manufact. Holdings (NYSE:AXL): The shares recently traded at $8.23, down $0.37, or 4.07%, on the day.  The shares have traded in a 52-week range of $6.77 to $16.20 and is trading at a price to earnings ratio of 3.84.  About the company: American Axle & Manufacturing Holdings, Inc. designs, engineers, and manufactures driveline systems for light trucks and sport-utility vehicles. The Company produces axles, propeller shafts, chassis components, and forged products. American Axle also manufactures various driveline components for light trucks and sport utility vehicles manufactured in North America.
  • Tenneco Inc (NYSE:TEN): The shares recently traded at $28.18, down $0.79, or 2.73%, on the day.  The shares have traded in a 52-week range of $22.47 to $46.81 and is trading at a price to earnings ratio of 19.74. About the compkany: Tenneco Inc. designs, manufactures, and markets emission control and ride control products and systems for the automotive original equipment market and the aftermarket. The Company’s products include shocks and struts, shock absorbers, mufflers, and performance exhaust products, as well as noise, vibration, and harshness control components.
  • Commercial Vehicle Group (NASDAQ:CVGI): The shares recently traded at $8.03, down $0.31, or 3.72%, on the day.  The shares have traded in a 52-week range of $5.65 to $19.62 and is trading at a price to earnings ratio of 36.54. About the company: Commercial Vehicle Group, Inc. supplies interior systems, vision safety solutions and other cab-related products for the heavy-duty truck market, the construction market, and other specialized transportation markets. The products include suspension seat systems, interior trim systems, mirrors, wiper systems, controls and switches specifically designed for applications in cabs.

(Note: Selected financial data are sourced from Google Finance. All data are assumed to be accurate.)

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