Toyota (TM) has a little bad news for once. In its last reported quarter. Operating profit fell 3%.
The world’s largest (or second largest, depending on who is counting) car company is having to invest in quality control and more manufacturing facilities as its business grows around the world.
Toyota has had to recall vehicles in markets in several countries, including the US, as production glitches show up in its manufacturing facilities that are being built in locations where demand is rising.
The Japanese company, which used to lead its US rivals in surveys like JD Powers, no longer has a huge quality edge, at least not in the eyes of the consumers being questioned.
Toyota’s growth has a second, and perhaps more important challenge than vehicle quality. It now has 15% of the US car market. Its share in Europe is also growing. As the company becomes one of the largest selling brands in a number of markets, it becomes the target of other car companies that want to hold or increase their sales. Toyota has gone from being the challenger to being the challenged.
The easier leg of growth may be behind Toyota. For shareholders who have watched the stock rise 65% in the last year, the run may be slowing as well.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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