Toyota Motor (TM) plans to sell its entire stake in Toyota Financial Services Securities Corp. to Tokai Tokyo Financial Holdings in January next year. This will enable the company to focus solely on its automobile operations. Ahead of the stock sale, the brokerage unit will acquire a stake of about 5% in Tokai Tokyo Financial in October this year.
Toyota has been battered financially by the economic crisis. The company posted its first annual loss (¥437 billion or $4.4 billion) since 1950 for the fiscal year ended March 2009. Further, management has recently projected net loss to worsen to ¥550 billion ($5.5 billion) for the fiscal year ending March 2010.
However, the recently ended Cash for Clunkers program strengthened demand for Toyota’s fuel-efficient vehicles in the U.S. The federal government program launched in late July allowed consumers to trade in their old gas-guzzling cars and trucks with a mileage of 18 miles per gallon or less for a value of up to $3,500–$4,500.
Toyota ruled the roost in Clunkers program, featuring as many as 3 models among the top 10 buys under the program. These are the Toyota Corolla (ranked first), Toyota Camry (ranked third) and Toyota Prius (ranked seventh). In terms of market share, Toyota enjoyed a lead of 19.4%.
We recommend the shares of Toyota Motor as Neutral.
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