On Thursday, Toyota Motors (TM) shares broke out, as the charts had suggested. Between August and late December 2024, TM stock traded in a narrow range at around $175 – $180.
Yesterday, TM stock gained 8.77% and closed at $197.34, at exactly its 200-day simple moving average on strong volume. To move higher, traders need to keep the stock at that level. Otherwise, the stock could revisit its trading range.
Nikkei reported that the Japanese automotive firm set a 20% return on equity rate by 2030. In effect, the builder of quality, reliable vehicles believes it may compete globally.
Unfortunately, the automotive recession is in the early innings. China flooded Europe’s market with inexpensive electric vehicles built by Li Auto (LI), Nio (NIO), and BYD (BYDDF).
European auto firms like Volkswagen (VWAGY) will likely trade to new lows this year. Stellantis (STLA) failed to cut Jeep and Dodge prices in the U.S. and will suffer more operating losses.
All of the automobiles will have trouble catching up to Tesla (TSLA). Tesla’s competitors do not have the mass market or the charging station network. They are also behind on self-driving software and cyber cabs.
Despite the headwinds, Toyota dominates in the hybrid market. Consumers may pivot away from EVs and buy hybrid vehicles instead. That would increase Toyota’s profitability toward the 20% ROE target.