According to The Wall Street Journal, the world's No. 1 automaker has reportedly been having second thoughts about building more U.S. plants. Even as it has surpassed General Motors (NYSE: GM) and continues to see U.S. sales grow, Toyota Motors (NYSE: TM) is finding that rising labor costs, an expensive dollar compared to the yen, and rising fuel costs doesn't make producing cars in this country the attractive endeavor it once was.
Concerns about quality slipping have also caused some headaches. The company recalled more cars in the U.S. in 2005 than it sold. Yet, fuel efficiency means that Toyota will continue to race ahead of GM, Ford (NYSE: F), and even DaimlerChrysler (NYSE: DCX), in whatever form that break-up takes.
CAPS take
As of this writing, nearly 2,000 professional and novice investors alike have weighed in with their opinion on Toyota at Motley Fool CAPS. The consensus? That Toyota will overwhelmingly outperform the market as well as lead the automakers. Nearly a quarter of those bullish investors are considered All-Stars, top-rated players who consistently outperform their peers.
Long-reigning top CAPS player TMFEldrehad, with a perfect 100% rating, doesn't think Toyota's lead in the future will have anything to do with costs or the yen, but rather in separating ourselves from oil dependency:
When talking about an alternative energy future, one doesn't have to read too many of my pitches to know that I've made a number of underperform calls on fuel cell and ethanol companies. When it comes to powering our automobiles, I don't think that's where our future lies, for a variety of reasons. So, what is the future for powering our automobiles? Well, in the next decade or two I think the answer is crystal clear-hybrids. ... I'm long on Toyota here (and also long on Honda) because of their leadership in the hybrid automobile market. Unlike the rest of the alternative energy hopefuls, I think *this* technology is the wave of the future, and I'm willing to put my CAPS jester cap on the line and place a bet on the market leaders.
My take
As difficult as it is to disagree with a Fool who has been the top player for so long, I think the vaunted U.S. presence of Toyota will ultimately work against it. U.S. labor costs are indeed high, and while that has served as a drag on GM and Ford, they've already been hard at work aiming to fix the problem.
This will be a new circumstance for the Japanese automaker. Further, with quality improving at its American rivals, Toyota's products will offer less differentiation than in the past. It's only one of the reasons I've invested in Ford and not Toyota, though admittedly it would have worked out better for my portfolio so far had it been the other way around.
Your take
Do you agree with our CAPS community? Toyota bulls have also been bullish on Altria (NYSE: MO), and Honda (NYSE: HMC) is another five-star rated automaker that could make a run for it. Make your voice heard and let us know.
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Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy
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