29 January 2010 0 Comments

Finding the TOY in TOYOTA

Toyota Corona3The first Toyota I remember was a 1968 Toyota Corona (the precursor to the Corolla).  My parents had just bought it by trading their 1962 Chevy station wagon plus $600.  My ten-year-old mind could not understand why they had to pay extra money when the trade left them with a smaller car!

This week, Toyota halted sales of eight models in its North American dealerships – the same cars included in last week’s recall of 2.3 million cars (apparently the accelerator would stick at inconvenient times).  That recall is in addition to the November recall of 4.2 million vehicles in which the accelerator tangled with the floor mat.  In all, roughly 5 million cars are affected (some cars were subject to both recalls) with further global recalls pending.

Toyota’s stock closed yesterday at $77.67, about $13 lower than last week.  With 1.6 billion shares, that means the value of the company dropped about $20 billion in one week. Toyota is worth about $125 billion today. 

A year ago, at the height of the U.S. auto industry meltdown:

  • GM and Chrysler were preparing for bankruptcy;
  • Ford was worth about $2 billion; they sold about 5.4 million vehicles in 2008 and posted a whopping $15 billion loss.
  • Toyota was worth about $98 billion, but their performance wasn’t much better than Ford: about 7.5 million cars sold for a loss of $4.3 billion.

Why was Toyota nearly 50x more valuable than Ford?

It turns out that value is more than financials.  Value is determined by the market, which takes other factors into consideration.  Value is also future oriented; people buy stock for what a company is going to do.  Remember that tiny 1968 Corona? It was worth more than the big station wagon because it was newer (and much cuter).

Organizations that determine their worth only in financial terms

are missing some of their value. 

Look closely at your own organization and consider the non-financial assets you have that bode well for your future:  Relationships; Quality; Integrity; Flexibility; Responsiveness; Great Staff; Customer Service; Community Engagement; Reputation; Unique Vision. 

Oh, you still need to make money to stay in business.  But you and your organization have value beyond the balance sheet, even if you are facing hard financial times right now.

What About You?

  1. What is unique about your organization that makes it more valuable than your competitor’s and might help you get through some difficult times?
  2. How can you nurture those assets to improve your organization’s financial health?

Leave a Reply below and share your story.

 Incidentally, Ford stock closed yesterday at $11.41/share.  That means Ford is now worth about $38 Billion, and Toyota is only worth 3x as much.  Pretty good for  the only U.S. auto maker to not partake in the government bailout.

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