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Toyota (TM) to Form Internal Company for Emerging Markets


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Toyota Motor Corporation (TM - Analyst Report) , along with its fully-owned subsidiary, Daihatsu, plans to establish an internal company that will cater to the compact vehicles sector in emerging markets. The new company will be responsible for all aspects of the business from product planning to preparation of production.

The internal company will be aimed at developing and launching competitive compact vehicles in the emerging markets where the potential for growth remains high. The company will be based on Daihatsu’s production technique of providing high quality vehicles at competitive prices in a market plagued by soaring competition. Toyota and Daihatsu plan to establish the internal company by Jan 2017.

Both Toyota and Daihatsu aim to strengthen their compact vehicles operations in emerging markets for sustainable growth. Daihatsu, which is expected to take the lead in the internal company, will be responsible for the development, procurement and production preparation for the compact vehicles, which will be based on its vehicle architecture, DNGA. Toyota, on the other hand, will be responsible for providing knowledge and resources. The product and business plans will be formulated by the two companies and their existing production bases will be utilized for the new company.

The internal company is expected to complement the benefits of both companies for its own advantage. Toyota believes it can learn from Daihatsu’s fundamentals of competitiveness and use the same in its own organization, while Daihatsu looks to gain from additional knowledge regarding production of mini vehicles. The companies intend to optimize their individual strengths and implement a strategy of “selection and concentration” to develop better cars.

Zacks Rank

Toyota currently carries a Zacks Rank #2 (Buy).

Some better-ranked auto stocks include Tata Motors Limited (TTM - Snapshot Report) , The Goodyear Tire & Rubber Company (GT - Analyst Report) and Spartan Motors Inc. (SPAR - Snapshot Report) .

Tata Motors has a long-term growth rate of 3.6% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Goodyear Tire has seen its estimates move north in the last 30 days. The stock sports a Zacks Rank #1.

Spartan Motors, also a Zacks Rank #1 stock, has a long-term growth rate of 15%.

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