Toyota: Moving Forward to Dominate the U.S. Market

Now that DaimlerChrylser has decided to sell most of its Chrysler Group unit to Cerberus Capital Management for $7.4 billion, Toyota Motor is the last large car company left in the U.S., at least as far as Cramer’s concerned. He thinks it’s the only play worth considering in the sector.

Granted, the stock is down 16 straight points, but there’s a reason. Toyota took a hit when it reported within its range, not blowing out the numbers, and offering a gloomy outlook for future quarters. The Japanese automaker also saw a 2.8% year-over-year decline in operating profit. Doesn’t sound good, we know, but Cramer says that decline happened only because Toyota is spending to grow the company. So while American companies are cutting production to get costs in line, Toyota is actually ramping up production. It’s in a position where it needs to build factories to keep up with demand.

Think of the recent drop in price as a buy-in opportunity, Cramer says, especially for a growth company with an eye toward the future. Toyota is the only car company with a serious plan to produce pollution-free vehicles based entirely on batteries, and it bought the biggest copper mine available in order to do that. Between its “green” developments and the increase in manufacturing, “Toyota is the lone growth story in one of the largest markets on earth,” Cramer says, “and you know how Wall Street loves growth.”

Two other quick things to note in regards to TM: Most of the company’s work force is non-union, which means Toyota saves about $30 per man-hour when it builds cars. The other is that, for some reason, mutual funds feed they need auto exposure. It’s a tic, as Cramer explains it, and he doesn’t see a better company in the space to buy.

Bottom Line: It’s not everyday that a competitor looks like it’s going to have to cut more production, and Toyota, the best manufacturer in the world, could use their help.

Jim’s charitable trust owns Toyota Motor.

Questions? Comments?