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The negative factors in US automobile sector

Categories: AutomobileToyota

Introduсtion

Last month, Toyota’s headquarters in Tokyo announce that they would be cutting down on their prediction again. For 2009, the company had prepared for ten point four million worth of vehicles. But this was reduced gain to a mere nine point seven million worth of vehicles. Their intention was growing their sales by six point seven percent but this has now been revised to two percent. This announcement was made on the same day that the company decided to reduce on the number of vehicles that were being produced in one of its leading Tokyo manufacturing plants.

It asserted that this was necessary in order to compensate the low sales in the US. The company had planned to produce about four hundred and thousand vehicles in that plant bit they have had to cut it down to three hundred and seventy vehicles. This was done because nine out ten vehicles made by that plant are normally exported to the US or to Europe.

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It would therefore make sense to minimize on such vehicles if their sales had slumped in these respective regions. (Bunkley, 2008) Because of these poor performances in the US economy, Toyota’s growth momentum has had o reduce.

Positive numbers before the USD recession

The company, which is one the leading automobile manufactures in the world, had recorded very positive numbers before the USD recession. As a matter of fact, Toyota’s ability to eliminate General Motors the leading automobile manufacturer in the world was possible because GM focuses mostly in the US yet the US‘s economy has not been performing well.

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(Rowley, 2008) In the month of April this year, it was announced that Toyota’s sales have overtaken General motors sales as stated earlier.

The reason behind this is that the company that had taken up the first position; GM had no chance of making it within the latter country owing to the problems that came about a result of the nature of the external factors. The economic situation affected the total vehicles that GM because they had not taken advantage of other market in the region. Fro instance, Toyota has been selling most of their automobiles in the Asian region and this is why they were able to overtakes their AUS rivals. However, GM did no take these statistics kindly.

They decide to counter the efforts made by their competitors by creating some sort of alternative for their clients. GM has had to put a lot of emphasis in their environmentally friendly vehicles. This has also caused Toyota to improve on their environmentally friendly vehicles. The company has had to invest substantial sums in the production of these low carbon vehicles so as to keep up with prevailing competition in the market. (Motor Authority, 2008) In response to these announcements, GM executives were asked about what they fleet about Toyota’s performance.

The overall goal for their performance level

The company representatives claimed that they focusing on the customer as the overall goal for their performance level. They also claimed that despite the fact that they would like to do just as well as Toyota or to be top of the range, this was not possible at the moment. Consequently, the company was targeting was in which they could achieve this through other strategies. This came after the announcement that the Toyota had recorded sales of about two point four million during the first three months of the year 2008.

Given this indications, analysts predict that by the end of this year, Toyota will be the supreme indicator of sales in the international automobile industry. These assertions came against the backdrop of increasing demand for the company’s products in all other parts of the world except the United States. However, some of GM’s representatives claimed that it would to be possible to focus on rivals such as Toyota yet at the same time deal with global expansion.

Experts asserted that Toyota performed well during the earlier parts of 2007. But was not able to maintain the same market today. While Toyotas is still performing well in the global arena, they are getting these good records from different parts of the world other than the US. The major reason behind this is that the country’s economy does not favor. (Krisher, 2008) However, all may to be lost for Toyota outlets in the US because the country is just about to conduct an election where t will select new representatives.

If it manages to do this effectively, then it may well be on its way to economic recovery after the company may record greater performances with the US as early as 2010 after economic policies for the elected president start taking shape.

Conclusion

The essay has examined some of the negative factors that the US economic recession has caused to the US automobile sector and specifically Toyota. It can be seen that a substantial amount of the company’ sales have reduced over the past few months. Toyota had been boasting of a steady increase in their profitability.

However, they have not recorded this in the recent years. In 2007 and also in 2008, Toyota had to revise their sales prediction for their global sales. They attributed this change in sales to due to economic recessions n Europe but mostly in the US. Thee are a number of reason why this has been the case for the company so far. First of all, consumers is the US market are struggling with tight credit markets. This means that most of them are given low credit ratings by financiers and these prevents them from accessing loans go purchase automobiles.

The second reason is due to oaring gas prices. Many individuals are avoiding car purchases because the latter are highly dependent on gas which is at all time high. The other reasons are that the country is currently dealing with some many problems revolving around their major industries. The housing sector has also been tricky and this has plummeted the US economy. However, there is some possibility for improvement if the country’s leadership favors it.

Reference

  1. Rowley, I. (2008): Is the US Toyota’s new export hub, Associate Press Motor Authority (2008):
  2. Toyota lowers 2008 global sales target, retrieved from http://www. motorauthroity. com/ Herald Leader (2008):
  3. Toyota cuts sales target, retrieved from http://www. kentucky. com/ Domain-b (2008):
  4. Toyota overtakes GM in Q1 2008 auto sales, retrieved from http://www. domain-b. com. Krisher, T. (2008):
  5. Toyota steals global sales crown from GM, The Associate Press Bunkley, N. (2008): US vehicle sales fall 13. 2% amid high gas prices and tight credit, associate press

Cite this page

The negative factors in US automobile sector. (2020, Jun 02). Retrieved from http://studymoose.com/credit-markets-new-essay

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