American car buyers on average have been buying up hybrids within just 12 days from their arrival on dealership lots this year — faster than electric-only vehicles and internal-combustion vehicles, suggests Carl Delfeld, international investing expert and editor of Cabot Explorer.
This all makes sense to me and to Toyota (TM) — the global leader in hybrid vehicles. Consumers may want to transition to EVs through hybrids, especially people that live in urban settings.
We will see who wins but Toyota has an edge in this global market where one size does not fit all consumers. For example, Toyota sells millions of vehicles in developing countries, where the electricity supply is unreliable or in rural areas in developed countries that lack access to widely available charging infrastructure or have longer commutes.
Toyota pioneered hybrid cars in the late 1990s with the Prius, which quickly became a strong seller allowing auto makers to meet tightening regulations on emissions in the U.S. and abroad.
Toyota remains the No. 1 hybrid seller in America, led by a gas-electric version of the RAV4 sport-utility vehicle, the nation’s top-selling hybrid. Toyota leader Akio Toyoda recently told reporters the company could make eight plug-in hybrids with the same number of batteries in a single 320-mile-range EV.
Hybrids, including plug-in cars, accounted for around 20% of Toyota’s U.S. sales in September, but the company said that rate could have been double if not for supply chain issues.
Besides the hybrid edge, the second reason to look at Toyota right now is that the yen’s sharp fall is boosting sales and profits at top Japanese companies.
A cheaper yen has typically been a positive for big businesses in Japan since the dollars that companies such as Toyota earn overseas are worth more in yen when brought back home, and cars made in Japan by workers paid in yen are cheaper than those made in the U.S. by workers who earn dollars.
In this sort of volatile market, putting some cash in high quality Toyota seems right as it trades at just 10 times earnings and down from a 52-week high of $213. I have a price target in the next six months of about $175 which is doable if the market stabilizes.