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Leases are the root of deteriorating financial statements for BMW? Why do you spread such misinformation?
Have you read the BMW press release for the reasons why the net profit dropped 6 %. Please refer to the press release and please stick to the facts please!
Unfortunately it is I who stands corrected. ljflx had more current information.
BUT profit deterioration for the latest quarter is a industry phenemona that includes both Toyota and BMW!
We don't use facts here. Facts are forbidden.... :P
So as I was saying earlier, have you heard about the crazy exploding engines in the Lexus GS?!?!?
Yeah I have heard about those exploding GS engines! But let me first refer to my creative writing class notes so I can elaborate further about those explosions
The point is not about lease per se, but a simple illsutration of the great distance some of the marques are going in order to maintain the illusion of selling a premium car at high prices (and cook the books at the same time).
That is simply not correct. BMW profit declined for three quarters straight, but Toyota increased quarter after quarter, including the latest quarter:
http://www.msnbc.msn.com/id/9922145/
That being said, I agree it is a tough market today to be a car maker. OTOH, it's always the tough markets that lead to major shifts in the industrial landscape; a bit like Darwinian evolution.
So who is incorrect?? Why dont we look at the facts before we do name calling:
WSJ.com dated November 5, 2005
However, Toyota reported a decline in operating profit, a core measure that doesn't include one-time charges or tax considerations. Operating profit for the quarter was 404.3 billion yen, down 3.2% from 417.6 billion yen a year earlier. Toyota blamed the decline on hefty spending on research and development, new equipment and sales promotion.
From the article you linked yourself from msnbc:
Operating profit fell nearly 7 percent compared to the same period a year ago as higher material costs and the shift in demand to smaller cars with lower profit margins squeezed earnings.
The Toyota profit that you are claiming went up includes one time charges/gains and tax effects . From a operating perspective these effects are irrelvent in relation to operating profits!
BOTTOM LINE
Operating profits for BMW and Toyota dropped during the last quarter!
GM and Ford's profits? Really, who has had a good year this year? DCX? IF so, only because their last one was so bad.
These are 80k cars new. And that's what the dealer is selling them for. It's worth 48-50 on trade in.
That's a 30k hit in less than a year.
After you pick up the Sepang wheels, if you just have to have the XJR look on your XJ, there are people on the web who sell the mesh R style grille insert! When you are all done, put the money you saved in a gold fund and watch it grow.
"Operating profit" is one of those things that do not have uniformly regulated reporting procedure. The finances can be cooked every which way to make "operating profit" look however the company wants it to look, especially since the context seems to suggest that R&D and good-will are not amotized according to Generally Accepted Accounting Procedures. In any case, your original post said "profit" not "operating profit." BTW, I'm not even sure BMW is admitting to "operating profit" being down; like I said, one-time write-off can be a powerful tool for cooking books.
Also, was just browsing some of the offers by High End Premium Marques, and noticed a most curious thing on MBUSA website: in the special offers section, besides MSRP, they also use "suggested dealer contribution" in the MBCredit offerings. That is indeed a funny term, after all MB is the manufacturer doing the suggesting, is it not?? What the heck does MSRP mean then if the manufacturer is also suggesting a lower number at the same time?
you mention the following:
In any case, your original post said "profit" not "operating profit."
Why dont you read my prior posts before responding to them!
My original post#11473 stated operating margins! I wrote the following:
These are tough times in the auto market. Including for TMC which in its latest quarter saw decline in its operating margins !
It appears you are completely ignorant in understanding that operating margins equals (operating profits/sales)!
You also mention the following:
BTW, I'm not even sure BMW is admitting to "operating profit" being down; like I said, one-time write-off can be a powerful tool for cooking books.
LOL!!! First try to learn basic accounting before you accuse anyone of cooking books
Happy Thanksgiving!
.....
First try to learn basic accounting before you accuse anyone of cooking books...
Namecalling and insults are totally uncalled for, dewey. They demean whatever argument you are trying to make. You will be better served simply making your point sans the other stuff you threw in above....
OAC what I said was not meant as an insult! I myself am ignorant about many things and that is not a self-insult! Most smart people are ignorant about accounting terminology and that is not an insult.
But if I boasted about the details of mechanical engineering without knowing what I am talking about then I would rightfully deserve to be called ignorant.
Big words for someone who falsely accuse others of name-calling.
For what it's worth, my post #11500 was a follow up reply to your post #11492, in which you stated:
"BUT profit deterioration for the latest quarter is a industry phenemona that includes both Toyota and BMW!"
That statement of yours is simply not correct because Toyota posted profit increase for the latest quarter. In fact, I quoted your above statement in my post. Your post #11473 had zilch to do with my post #11500.
If you are not able to following threading of this forum and prefer to indulge in obfuscation and name-calling instead, you are only making a fool out of yourself.
What terminology are you talking about? For crying out loud, I actually was an accounting minor. Are you talking about EBIT or EBITA?? Obviously from Toyota statement, they are not amortizing R&D or good-will in the "operating profit" number (taking a up-front hit instead). In any case, the statement of yours that I was correcting did not even have "operating profit" but instead you said Toyota profit was deteriorating (post #11492); that statement simply did not jive with facts.
But if I boasted about the details of mechanical engineering without knowing what I am talking about then I would rightfully deserve to be called ignorant.
I will refrain from this open invitation, for now ;-)
Does anyone want to get back to the cars?
The CEO of BMW North American Operations is bewildered by his following observation :
With costly gas and a hissing real-estate bubble, however, even Purves wonders why so many people are buying his company's expensive cars. "I'm confused at the moment about the economy,"
BMW
If Toyota is saying their operating income was hindered a tad because of heavy r&d, it simply means they are being very conservative in their bookkeeping. They probably could have capitalized those costs and chose not to because of several reasons. Most likely they felt the top line growth was more than sufficient and that the stock would not suffer a hiccup - so let's get rid of the costs now. Another reason could be they wanted to be conservative in this day and age of companies improving P&L results by putting future risks in the Balance Sheet. More than likely it was a combo of both and you can bet your life that if the top line growth was absent or too slow, Toyota would have capitalized a lot more R&D costs rather tha write them off at inception. But with headlines everywhere that they are quickening their pace to number 1 global auto maker it is a great time to expense such costs rather than capitalize them into the Baance Sheet. Smart decision as it results on a very minor one time effect on earnings, in a period of solid growth, and during a period where it's stock is the highest priced auto stock in the world - trading at the highest multiple of earnings.
So is Purvey an idiot or genius for being worried while stock markets are humming along? In all honesty who knows, not even the Oracle of Omaha makes Index bets! But let us consider the following:
The Dow Jones was hitting all time highs and the the Great Depression followed!
The US stock indexes in the early 70s was doing wonderful primaily due to Nifty 50 stocks but was followed by a serious recession.
And 2001 was a wonderful year to be in Nasdaq stocks and I guess you know the rest.
OK since I made a promise on a prior post to focus on cars I have provided a link to a article on the luxury car market!
Any luxury car executive who reads the the trends in the article should be worried!
Worried You Bet!!!!
I dont know what the markets will be in the future? In fact I dont really care! My daily focus is finding good individual stocks with a margin of safety and currently I am having the toughest time in my career finding such equities in the USA and Canada! IMO that to me does not indicate low markets in North America!
I find your opinions interesting, but I guess we are both here to focus on car opinions.
Everyone in the world of car manufacturing knows that higher quality and reliability go hand-in-hand and REDUCE costs.
For example, rare leather hides mis-sewn into seats are indeed expensive but are a low quality product. It cost a lot to make them poorly, and even more to fix them later. The same is true product line wide, C, E, S, etc.
Mercedes is in CYA mode as they spend the next decade trying to get anywhere close to Lexus quality and reliability, they are going to be much more friendly in their stores to their 'passionate' customers that spend a lot of time there. Guess where the funding for that 'attitude' change is coming from? Yep, 7% here, 5% there in new car prices.
They have a huge hill to climb and they are also merchandising themselves far beyond likely performance.
Clock's ticking, methinks.
They have a huge hill to climb and they are also merchandising themselves far beyond likely performance.
Clock's ticking, methinks.
Sssssshhhhhh !!!!! Be careful here...Before long you'd be accused of predicting MB's demise at a time they are undergoing a resurgence and revival in fortunes... Ticking clock on MB's watch ???? Forgetaboutit....
Time is an enemy sometimes....
"Thai and Indian companies are fast catching up. My fear is that Japan will soon be overcome by Thai and Indian companies," said Okuda Hiroshi...
...Indian firms are improving their standards. "I am aware of the excellent quality levels of Indian IT [information technology] and manufacturing companies. But, in the field of quality, Japan is standing still," said Mr. Hiroshi at an industry meeting.
He said no Japanese company has recently won the Deming Prize, an award from the Union of Japanese Scientists and Engineers. Indian companies such as motorcycle and scooter maker TVS Motor Co. and Rane TRW Steering Systems Ltd. have won the prize.
source WSJ online
I don't even want to imagine a world in which Lexus quality falls to recent MB levels.... Maybe we will all be buying Korean (or Indian or Thai) luxo sedans.
LA Times: Toyota Fretting Over Quality
IBM was 'so strong no other computer company can compete!'
GM was 'driving all other car companies out of business!'
Sears was 'pushing Main St stores into bankruptcy!'
You see, the world is a strange but good place, and things have a way of working out.
;-)
Toyota obviously saw what happened to VW and M-B when they lost focus and let their quality drop off the map. You dont want to wait until your customers are leaving you in droves before you decide, hey, now might be a good time to maybe think about why our cars are falling apart.
I suppose Ljflx will have a totally sober and rational answer to my query ;-)
Seriously - Growth for an emerging company is dangerous - witness People's Express. That's why they failed - too much too soon and a violation of their initial business plan. Growth for a large well established company like Toyota is quite manageable - but always comes with a hiccup or two. In the case of MB they actually violated their core business principles by going boutique to mass manufacturer with too many strategies at the same time. Issues were everywhere - from lowering price (and prestige) to big increases in production to trying to lead in electronics as opposed to their real strength in engineering to taking over a larger car builder, to trying to create a new super brand in the Maybach and then the ace of aces - backing Mitsubishi. Add in something we don't see on this side of the Atlantic - Smart - and you have a recipe for a big dip. I lose track of the pitfalls that they set up for themselves but they most certainly hit every one of them pretty hard. Simply put - they were experts at coring a small Apple but coring that big Apple needed better equipment.
The search took me almost a year. Why ? I found out that the LX is so hard to depreciate in value. This is a truck that has the smallest HP of the lot, it can barely sit 7 people, unlike its competition, it has been in the same skin, more or less for a decade, yet it still sells briskly, and it holds real strong in the resale market. So what's the point ? Lexus/Toyota's strong reputation of quality and reliability even when the car/truck isn't the most pleasing to the eye, the most powerful, or the biggest/baddest says a lot about the company. So it makes the most sense that when a chink appears in this strength, Toyota must deal with it promptly. As the adage goes: "A stitch in time saves nine", Toyota is addressing their problems head-on without hiding behind a facade of denials and head-buried-in-sand, unlike some other car brand we dare not mention.
Reminds me of an article back in 2000 when GM proudly announced that they have plans for a hydrogen-powered car by 2010, while scoffing at a gas-hybrid vision from Toyota. Then, industry experts noted the challenge for GM/s ambitious H2-powered plan, and almost unanimously agreed that it would be impossible to achieve in that timeline.
The first H2-powered street car in the US, a Honda Civic, is owned by a California dude. Cost of $1 million. Honda came out with one ahead of GM. Would the H2-powered car truly take hold ? A very difficult challenge indeed !!! In the interim, Toyota is enjoying a huge boom in business with visionary leadership in hybrid tech as gasoline demand soars globally, unlike the clowns that ran GM to oblivion.
Sad...