Feb 3, 2010: Toyota's Misery, US Economy

When my family received a letter regarding our Toyota Camry two weeks ago, I should have realized this would be a great trading opportunity, but alas I did not. Toyota Motor's [7203:TYO, TM:NYSE] recall will forever change their reputation as a safe, reliable vehicle. The worldwide recall which occurred in the last week of January has put a damper on Toyota's sales. The company actually halted vehicle sales in December when a lesser-known recall was reported in late November. Earlier today US Transportation Secretary Ray Lahood told owners to stop driving their Toyota and immediately take it to their dealership, as a fix has been found. Later in the day, Lahood retracted his statement, as it turned out this was false. For anyone who has a recalled make, Toyota suggests a simple test. "If you experience any issues with your accelerator pedal, please contact your dealer without delay. If you are not experiencing any issues with your pedal, we are confident that your vehicle is safe to drive." But that's not all. In the last 48 hours, more problems have appeared in Toyota vehicles. There have been 140 complaints with respect to the 2009 Prius. The vehicles are not responding to braking, as well as sudden acceleration. This problem has already caused at least two injuries and two crashes to date. I am not here to spread propaganda or speculation, but if you own a recalled vehicle, please be cautious and pay attention to the news. These vehicles are the 2009-2010 RAV4, 2009-2010 Corolla, 2009-2010 Matrix, 2005-2010 Avalon, 2007-2010 Camry models (excluding hybrids), 2010 Highlander (excluding hybrids), 2007-2010 Tundra, and 2008-2010 Sequoia. The 2009 Prius is not yet on the recall list, as investigations are under way. Meanwhile, competitor's are thriving in sales in the wake of the news. All but Chrysler reported an increase in January sales year over year, and net US auto sales rose to 10.8 million from 9.6 million last year. Yesterday, US home sales also showed positive growth, another sign US economic conditions are improving, and this morning, services industries also showed improvement, but less than expected. The figures were limited due to high unemployment. The recent plethora of news has allowed markets to rise strongly in February, albeit three days old, after a steep sell-off to finish January. For many of my friends and family, the struggles will continue, but signs show there is light at the end of the tunnel. A recovery is in the works, although many see it as slow-paced. On average, Bloomberg analysts believe the S&P500 will finish the year up 10 per cent.