Filed under: Car Buying, Lexus, Toyota
Toyota sees more struggles in 2009, blue skies next decade
The US auto industry has hit a serious slump in 2008, with overall sales estimated drop by two million vehicles compared to 2007. Even the mighty Toyota has seen sales slip by 7.8%, which is better than the industry average, but a far cry from annual increases of 10%. And times may not improve in 2009 either, as the credit crunch and mortgage crisis have conspired to kick the auto industry in the pants. Toyota sales boss Jim Lentz says the mortgage crisis is the main culprit of tough sledding for the Japanese automaker. Florida and California, which account for 30% of overall Toyota Sales, have been especially hard hit by decreased home values. Lexus sales have been hit hard, too, as one third of all of purchasers in the Sunshine State use home equity to buy their luxury vehicles. It doesn't take an accounting degree to know that houses are typically assets and cars are almost always liabilities. That large amounts of people who were using home equity to purchase cars is disturbing, and it's likely a trend that isn't unique to Toyota. Toyota does see light at the end of the tunnel, as the Japanese automaker expects the US population to grow by 32 million in the next decade. Toyota also expects the rate of affluent customers to rise, which means more people with more money will want to buy a new car or truck. For the near term, since housing has gone nowhere but down and lenders are having trouble coming up with money, we're guessing the car market will be taking a hit for quite a while.
[Source: Detroit News]
Reader Comments (Page 1 of 1)
Rick 8:44PM (9/17/2008)
Who did their economic analysis for the next 10 years? The guy must have been smoking crack.
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Mr Cool 8:53PM (9/17/2008)
Big Brother is watching?
Russell 10:16PM (9/17/2008)
"Toyota sees more struggles in 2009, blue skies next decade"
Can Toyota see me mooning it?
jim 8:58PM (9/17/2008)
a car itself is an asset.. there may be a corresponding debt on the balance sheet but it is an asset.. a person may owe more than the car is worth but that is another issue.
houses are assets and again, there may or may not be debt on the house and the house may be worth more, less, or the amount of the debt.
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Berto 9:29PM (9/17/2008)
Such an awesome way of thinking.
things are not going too well for me... I'll just wait ten years for it to fix itself!!
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tekdemon 11:47PM (9/17/2008)
You're right, Toyota should fix this economy ASAP by regulating mortgage lending and investment banks better.
DAMMIT TOYOTA, WHY DID YOU LOAN ALL THOSE PEOPLE THOSE MORTGAGES?
J M C 3 9:33PM (9/17/2008)
This whole mess began when a certain president (OK Clinton)deregulated the mortgage industry and people bought houses(sometimes many) on spec. artificially inflating their value.
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Russell 10:26PM (9/17/2008)
This whole mess could have been stopped by a certain president that took the post after Clinton, instead we spent so much money in a certain country that it would be enough to buy a house for everyone in US.
jsjs 11:43PM (9/17/2008)
While Clinton deserves some of blame for signing the bill that did away w/ the protections of the Glass-Steagall Act, the person most responsible for that, along w/ the disastrous commodities DEREGULATION (including the "Enron Loophole") is none other than McCain's (former) economics "guru", Phil Gramm - who referred to the US as a nation of "whiners").
Easy for him to say when he and his wife are living the high life after they helped destroy Enron (Gramm's wife was on the Board) and UBS (Gramm was a vice-Chairman).
Jeff 8:19AM (9/18/2008)
The ultimate responsibility for the mortage mess falls upon the heads of the idiots who borrowed more money than they could afford to pay on a house they could never afford. Who cares if the bank would loan it or not, just because someone offers something to you does not mean you have to take it.
Whatever happened to personal responsibility? Everyone wants to blame Clinton or Bush or the bank. YOU were the one who signed the paper the ultimate responsibility falls upon YOUR head.
Idiots who borrowed more than they could afford to pay back are the ones responsible for the mess we're in now.
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jsjs 3:22PM (9/18/2008)
True, but it was also the I-banks, insurance companies, etc. that got greedy and over-leveraged themselves w/ "securitized" mortgages w/o doing any proper risk-assessment.
brn 9:50AM (9/18/2008)
There's plenty of blame to go around.
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Mike 1:51PM (9/18/2008)
Actually, it is all Toyota's fault.
Toyota starts selling boring ass cars in droves.
People stop caring about cars as more than appliances.
Human nature is to flaunt your possesions.
Now that cars are not status symbols, they moved to houses.
The Jones' just had to have that 6,000 sq ft home on Mr Jones' $25k paycheck.
The banker is a former car guy, disgusted with what's happened to the industry decided to ruin the economy and loan Mr Jones $1.9 mil to buy that big ass house.
Mr Jones defaults on his first 10 payments and the banker forcloses.
The banker laughs because the Jones' now have to live in their Camry.
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MAC 3:25PM (9/19/2008)
What dummy takes a equilty out of their home to buy a luxury car? No wonder the economy is a mess.
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Andrei 8:28AM (9/23/2008)
Hmm ever wonder that maybe people making enough to buy luxury cars know how to manage $? Could it be that the reason they use home equity loans is because they can deduct interest from home equity loan from their taxes but same is not true for car loan?