On Wednesday, Transportation Secretary Ray LaHood advised Toyota owners to "stop driving" cars affected by the recall and return them to dealers for maintenance. By the time he called this an "obvious misstatement," Toyota's shares had tumbled downards 7.8% to $72.06. Every little rumor and misstep has regulators, Toyota owners and stock analysts on edge. To help make sense of the noise, commentators have turned to examine the financial impact of turmoil at the world's largest automaker.
- Time to Buy Toyota Stocks? asks The Wall Street Journal's Matt Phillips. Apparently not. According to a J.P. Morgan analysts he interviews, Toyota's stock is still not undervalued:
From a historical perspective, the stock is trading near the lower end of its [price-to-book] range, suggesting that downside risk may be limited. However, the stocks of other automakers are also trading at historically low valuation levels. In terms of [price to earnings], the stock is still at a premium and therefore does not look undervalued to us. Given the growing uncertainty about near-term earnings, we look for Toyota's valuation premium to disappear and the stock to trade at a P/E multiple around the sector average.
- Whatever You Do, Don't Sell Your Toyota, writes Jennifer Saranow Shultz at The New York Times: "Kelley Blue Book analysts said they expected the average resale value of recalled Toyota models at auction houses and dealerships to drop 1 to 2 percent this week from its level before the recall. This translates to roughly a $200 to $400 decline, depending on the model." She recommends getting it fixed and keeping it until the market for Toyotas gets more seller-friendly.
- Get Ready for a Jolt to the Economy, writes John Curran at Time: "Now that the automaker has found a fix for its sticky accelerator-pedal problem, it's going to quickly start sending mini repair kits to its dealers around the world. The estimated time for a dealer to install the repair is 30 minutes--repairs are to start happening within the week. If you take the 4.1 million cars that need the fix and multiply that by 30 minutes, you arrive at a pretty meaningful jolt to employment: It will take more than 2 million work hours, the equivalent of 234 years, to install the fix in all 4.1 million cars."
- This Is Going to Shake Up the Industry, writes Chris Shrunk at Autoblog: "The Japanese automaker isn't the only party looking bad right now. The National Highway Traffic
Safety Administration seems to be in a bad spot too since it appeared
to act very slowly in taking any action against Toyota in spite of the
fact that claims of unintended acceleration counted in the hundreds.
Mix in accusations that Toyota was able to hire an ex-NHTSA employee
who may have influenced some of the government agency's decisions and you've got a recipe for spending unwanted time with Congress. The question the entire auto industry is likely asking right now is,
What's next? Will NHTSA continue to treat automakers with trust?"