Trucks, Texas, and Toyota

In 1985, my father decided to replace our baby blue, 1969 General Motors (NYSE: GM  ) pickup ("Babe"). We wanted something a little less rusty, something with a real muffler on it rather than the sawed-off coffee can that Babe sported. A decade-long fan of Datsun -- now Nissan (Nasdaq: NSANY  ) -- cars, Dad was looking at Nissan and Toyota pickups. But I dissuaded him: "Dad, buying a Japanese truck is like buying an Italian tractor -- it just isn't right. Only Americans can make real trucks."

Jingoistic argument or not, I ultimately won out and we got ourselves a Ford (NYSE: F  ) Ranger.

Fast-forward two decades and that argument no longer holds water. Half the Japanese car companies are partly owned by U.S. and European auto makers, and it's anyone's guess how much of any given "American" truck was actually produced in the U.S. of A. Drive around the nation's capital, for example, and you can see the results of the globalization of the auto industry. It seems half the trucks on the road are sporty little Toyota (NYSE: TM  ) Tacomas.

According to yesterday's Washington Post, the domestic/import truck battle, which is already fast being lost to Japan by GM, Ford, and DaimlerChrysler's (NYSE: DCX  ) Dodge on the East Coast, is now heating up down in the heart of American truck country. In Texas, where barely 3.5% of registered trucks are foreign brands, that percentage is predicted to rise by half in 2004. Toyota's market share is only going to increase when it completes construction of its new San Antonio factory in 2006, where it plans to produce 150,000 Tundra pickups annually.

Texans already buy about 15% of all full-size pickups in the U.S. Given a choice between buying a Chevy truck from Detroit and a Toyota truck from San Antonio, Texan buyers are going to be hard-pressed to decide where their loyalties lie.

Similarly in Mississippi: Which is the more "domestic" truck? The Ford from Dearborn or the Nissan Titan produced in Canton? It's a quandary that's going to afflict more and more American truck buyers over the next few years.

For auto company investors, however, the choice should be clear: The Big Three can only lose market share and pricing power as Japan gears up to steal it from them. And the more profits Japan is able to take away, the better Toyota and Nissan stock is going to look.

Tom Gardner loves uncovering small, undervalued companies. To see the work he's doing, check outMotley Fool Hidden Gemsfree for 30 days.

Fool contributorRich Smithis not a certified "car guy," so before he bought his truck last year, he consulted the experts on The Motley Fool's Buying and Maintaining a Car discussion board. He owns no shares of any company mentioned in this article, but he does own a Chevy S-10 with Texas plates.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 507095, ~/Articles/ArticleHandler.aspx, 9/20/2014 6:24:34 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement