Another reason why Toyota’s automobile sales could have gone down is due to the fact that the company, along with other automobile corporations, depends on the credit market substantially. Many Toyota Company usually work hand in hand with loan companies to lead to automobile consumers. However, the numbers of financial loans fro automobile purchasing have substantially reduced because interest rates on loans have gone up. This implies that consumers with low credit ratings are automatically disqualified now. It should be noted that that was not lays the case in the past.
Before the poor performance of the US economy, the credit market was quite flexible and its standards were not too high. Clients whose ratings were below par could still access automobile loans but this is no longer the case. Toyota manufacturers assert that the have lost about seven thousand vehicles worth of sales due to this tight credit market. (Bunkley, 2008) Toyota has also not been performing well because the receding US economy has caused insurance companies to raise their bar too in the same way that financial companies have adjusted their standards.
This means that Toyota as an automobile dealer has to look for other methodologies of selling the car and this makes it considerably harder to do so in the end. In line with this argument is the fact that the company has no reduced the number of leases which they give to their clients because most of them may not have the ability to control expenditure. The reason behind the falling numbers of leased cars is because many consumers are now keeping away from certain types of vehicles. The most prominent category among these vehicles are the sports utility types.
By staying away from such vehicles, consumers who would like to access a second hand version f the commodity have to part with huge sums of money. The overall result of this is that the Toyota Company has recorded numerous losses in terms of leases. The latter have lost there profitability as was seen in the nature of the company’s performance during mid 2007 to early 2008. Many Toyota outlets now find that they have to write off hundreds of thousands worth of leases. Currently, Toyota has lost eight hundred thousand dollars worth of leases that have gone bad.
As it can be seen above, a large chunk of the expenses and the liabilities encountered by the company are redirected to the consumer. In response to this, the consumers themselves are walking away and looking for another alternative to automobiles. It should be noted that Toyota is not the only company undergoing this lease crisis. Other companied are feeling the pinch too but most of them are looking towards reducing the amount of leasing that they conduct. While all the latter reason could have led to Toyota’s current situation.
There is one particular reason that is largely responsible for the chaos within this company currently; this is the petroleum industry. Prices of gas are now at four dollars a gallon and this has caused many would-be clients to stay away from Toyota or any other automobile manufacturer. The economy’s sluggishness has definitely spoilt it for Toyota. (Herald Leader, 2008) As if the latter are not enough, the company’s has also been affected by the currency. It should be noted that the yen is much weaker than the US dollar. Consequently, when the US dollar slackens, then the yen slackens much more.
As it is today, the US dollar has gone now by close to twenty percent. However, Toyota’s executives can turn this around by utilizing international business. If the company decides to export US made models to other parts of the world, then it could actually benefit from the fact that eth US dollar is underperforming. As it is today, the Sequoia (which is US built) has been recording high performance levels within the Tokyo stock exchange. Some analysts even asset that this model has been performing at similar levels to the Land cruiser.