Toyota Motor Corp (ADR) NYSE: TM

Toyota invested 240 million pounds in one of its plants. This investment came despite Brexit. The Burnaston manufacturing plant makes the Toyota Auris and Avensis. The factory made nearly 180,000 vehicles in 2016.

A professor of international business at Warwick Business School, Nigel Driffield, commented on Toyota’s announcement.

“Toyota’s announcement may be considered ‘business as usual – for now’. The £240m investment is dwarfed by the proposed $10bn that the company intends to invest in the US over the next 5 years, and is an amount that is not much more than ‘ticking over’.

“However, this announcement by Toyota is further evidence that the car industry is confident that even in the event of a hard Brexit it will get the type of support that it needs from the Government to remain competitive.”

Volkswagen beat Toyota to become the leading automaker worldwide in 2016.  VW’s rise resulted from sales in China. But a global emissions scandal clouds the automaker’s victory. A recent $22 billion settlement and admission of guilt to criminal charges have not helped. In addition, the company’s profits took a hit.

VW CEO Matthias Mueller does not want to stand as a leading global auto producer. That is not one of the company’s goals. This suggests how VW beat Toyota did not impress him as much as other concerns. Nevertheless, Toyota sold over 10 million vehicles. Toyota led global sales for seven out of eight of the previous years. This makes the turnaround — how VW beat Toyota — more surprising.

The automaker passed General Motors backed in 2008. General Motors held the top spot for decades. But lost its lead as it neared bankruptcy in 2008. GM reclaimed its position in 2011 due to a decrease in Toyota’s sales. Some cars began to accelerate on their own.

Public outrage and skepticism caused lower sales. VW beat Toyota due to a sales boost last year in China. It was the largest seller of new vehicles in the country.  Last year, VW sold nearly 4 million vehicles there up over 12 percent. In contrast, U.S. sales dropped to 591,100 vehicles.

Observers expect China to overtake Europe as VW’s biggest market. This is despite a 4 percent increase in sales last year. Still, the emissions scandal will plague the company for some time.

As we reported, the global scandal hurt the company’s image. The ongoing emissions scandal covers about 600,000 U.S. vehicles.

The company paid $4 billion to settle civil and criminal accusations. In addition, VW pleaded guilty to criminal felony charges. The settlement includes nearly $3 billion in criminal penalties and $1.5 billion in civil claims. The Justice Department announced the deal in early January. The felony counts include conspiracy to defraud the United States and the country’s VW customers. VW violated the Clean Air Act while doing so.

The company destroyed materials related to the scandal. Last, the company gave false statements about its vehicles’ adherence to emissions rules. Now even ex-VW employees face questions. The Germans showed evidence that the company’s former CEO took part in the scandal.

Toyota Offers Strong Competition to Beleaguered VW

In fact, documents show the Martin Winterkorn, the former VW CEO, ingrained himself in the fraud. German officials investigated the former CEO for false ads and fraud. This is the latest move by the country to expand the scope of its review. Germany has nearly 40 people under review. This news leaves the automaker wide open to lawsuits in other countries.

Right now, shareholders want billions — for their losses and the company’s deception. U.S. officials indicted six employees on conspiracy charges. Five of them reside in Germany and another is in a Miami, Florida jail.  Many VW executives refuse to leave Germany. They do not want to chance extradition to the United States. The scandal left a blemish as VW beat Toyota to become the global leader in auto sales.

Source: Manufacturing Global


Please enter your comment!
Please enter your name here