Toyota Drops Most in Seven Years, Slipping Behind VW (Update1)
By Naoko Fujimura
Oct. 7 (Bloomberg) -- Toyota Motor Corp. had the biggest intraday drop in seven years in Tokyo, losing its spot as the world's largest automaker by value to Volkswagen AG amid rising concerns that global growth is slowing following the collapse of the U.S. mortgage market.
Toyota dropped as much as 8.2 percent to 3,580 yen and traded at 3,660 yen as of 10:15 a.m. on the Tokyo Stock Exchange, giving it a market capitalization was $124.7 billion. Volkswagen's value was $135.5 billion as of yesterday.
Toyota's sales in the U.S., the world's largest auto market, have plunged this year as higher fuel costs have cut demand for Tundra pickups and Sequoia sport-utility vehicles. Wolfsburg, Germany-based Volkswagen's shares have gained as Porsche SE has bid for a majority stake and it benefited from hedge-fund trading strategies.
``The auto industry is in a difficult situation right now,'' said Edwin Merner, president of Atlantis Investment Research Corp. in Tokyo, whose parent company manages about $3.1 billion. ``Toyota is well positioned to survive, but it will suffer like all the others.''
Toyota has fallen 56 percent since its peak at 8,340 yen in February 2007. In contrast, Volkswagen rose to all-time high at 304 euros on Sept. 18.
Industrywide sales of cars and light trucks in the U.S. fell for the 11th month in a row, the longest slide in 17 years, as the financial crisis caused lenders to toughen loan standards and consumers curbed spending.
U.S. sales at Toyota plummeted 32 percent in September, the biggest such decline since 1987. Toyota is halting production of Tundras and Sequoias for three months from August. The carmaker reduced its North American sales forecast for 2009 to 2.7 million vehicles from 3 million, it said on Aug. 28.
About 15 percent of Volkswagen's common shares as of last month were shorted, or borrowed and sold on expectations they can be repurchased later at a lower price, according to London- based research firm Data Explorers. That was the most in Germany's 30-stock DAX Index.
Traders who shorted the shares on expectations they would decline on were forced to close their positions, according to three people in the securities-lending business who declined to be identified.
To contact the reporter on this story: Naoko Fujimura in Tokyo at email@example.com
Last Updated: October 6, 2008 21:23 EDT