Should You Buy Toyota While It's Below $200?

Core Viewpoint - The current market conditions suggest that investing in established automakers like Toyota may present a contrarian opportunity despite recent underperformance compared to the S&P 500 index [1] Group 1: Market Performance - Toyota retained its position as the world's top carmaker with unit sales of 5.16 million vehicles in the first half of the year, although this was nearly 5% lower than the same period in 2023 [2] - The company faced significant challenges in Japan, with a 32% year-over-year decline in total unit sales due to a testing scandal involving its Daihatsu division [2] - Sales in China also fell by almost 11% due to sluggish economic growth and increased competition from domestic manufacturers [2] Group 2: Sales Dynamics - Despite challenges in certain markets, Toyota's sales in North America increased by nearly 15%, driven by the popularity of its traditional internal combustion engine and hybrid models [3] - In Europe, Toyota's sales rose by just over 10%, indicating a favorable reception for its hybrid offerings [3] Group 3: Strategic Shifts - Toyota is shifting its strategy to increase hybrid production and invest in alternative green technologies, including hydrogen vehicles, positioning itself well if the electric vehicle market slows down [4] - Analysts predict a dip in profitability for fiscal 2025, with earnings per American depositary receipt (ADR) expected to decrease from $22.58 to $21.71, but a recovery to $22.85 is projected for fiscal 2026 [5] Group 4: Dividend and Investment Outlook - Toyota offers a reliable dividend yield of just under 2.2%, which is more attractive than the average 1.3% yield of S&P 500 stocks [6] - The company's strategy, while once seen as outdated, has proven viable, and its strong brand and technology are expected to maintain its competitive edge [6]