Toyota? Well, Sort Of...

[Newbiewar]

Ever heard of Toyota Industries? No, not thatToyota (NYSE: TM). Toyota Industries is the original Toyota, founded in 1926; it spun off the far more familiar automotive division in 1937. Though it trades on the Pink Sheets, Toyota Industries' relatively low valuation and lucrative partial interest in its more famous offspring could make it a Foolish opportunity.

What began as a company to make looms for textiles now manufactures forklifts, cars, and auto parts. The Rav4 and Yaris are both manufactured by Toyota Industries, but bear the Toyota Motors logo. Confused yet? It gets better: Toyota Motors owns 23.5% of Toyota Industries, and Toyota Industries owns 5.55% of Toyota Motors. (Japanese companies love cross-holdings.)

As one of the largest holders of Toyota Industries, mutual fund maven Marty Whitman of Third Avenue Value has made a killing. Whitman likes to buy stocks of companies trading below breakup value. That means that if you took the company, sold off its assets, and paid off its debt, you'd have more per share than what you invested. Whitman's been steadily adding to his position for years, which may have helped his fund average more than 16% a year since its inception in 1990.

Whitman isn't just seeking to buy undervalued companies -- he also wants to see growth from their underlying assets. In Toyota Industries' case, those assets are its big stock holding in Toyota Motors. The car division's stock is up about 150% in the last 10 years. It's on track to be the world's largest auto manufacturer in a few years, while its biggest competitor, General Motors (NYSE: GM), has junk-rated bonds.

With Toyota Industries, a member of the Fortune Global 500, down roughly 15% from its high for the year, now might be a good time to investigate its shares. The popularity of Toyota Motors' cars worldwide won't wane any time soon, and Toyota Industries might be a good -- and inexpensive -- way to benefit from that trend.

http://news.moneycentral.msn.com/ticker/ar...9&Symbol=GM

[z28luvr01]

This is probably quite a stetch, but is it possible that, based on this information, that Rav4 and Yaris sales do not count when it comes to discussing Toyota Motor Company's sales, since they are not made by that company?

[Newbiewar]

my wonder if toyota industries is struggling financially... is toyota motors shifting any burdons onto its partially owned toyota industries to show profits and to gain marketshare without aquiring negative media... ?

[thegriffon]

This is probably quite a stetch, but is it possible that, based on this information, that Rav4 and Yaris sales do not count when it comes to discussing Toyota Motor Company's sales, since they are not made by that company?

Sales count production does not. Such contract production is not unusual. Toyota usually ensures it has at least a 50% interest in it's major vehicle suppliers (Daihatsu Kogyo, Central Motor, Kanto Auto Works, Hino Motor, Toyota Auto Body etc.), Honda recently acquired a majority stake in its minicar supplier. Toyota Industries, which is a much broader industrial concern (it still makes textile machinery as well as forklifts, electronics, dry pumps, vehicles, engines [almost all of Toyota's diesels] and other components) is the only major supplier in which Toyota has only a strategic interest. Edited August 15, 2007 by thegriffon

[thegriffon]

BTW, the Vitz/Yaris is also produced at Toyota's Takoaka plant, along with the Corolla, ist and xD. The RAV4 is also produced at the Tahara plant which produces the 4Runner, GX470, LS, GS and IS.