Toyota Motor Corporation (ADR) (TM): Is It Time to Hit the Brakes on This Stock?

Certainly Toyota’s facing other problems than just the decline in U.S. sales for two of its three best-selling vehicles. China’s a huge headache for this company: The ongoing political strife between China and Japan has hurt Toyota Motor Corporation (ADR) (NYSE:TM)’s position in the world’s second-largest economy. Rival General Motors Company (NYSE:GM) has taken a solid lead as the top automaker in China, and with political tension in the Pacific unlikely to go away any time soon, it’ll take a minor miracle for Toyota to catch up with its American rival.

However, Japan’s export-friendly monetary moves since new prime minister Shinzo Abe took office should help Toyota’s overseas ambitions. The weakening of the yen against the U.S. dollar – something that shouldn’t slow down any time soon, considering Abe’s pledge to turn around Japan’s sluggish economy and reach 2% inflation – will make Toyota’s American efforts all the more valuable and should help the company stave off losing too much market share.

Fortunately, Toyota’s still seeing strong growth in vehicles outside its best-selling sedans. Sales of Lexus cars jumped by more than 13% in March and have climbed by nearly 18% in 2013 so far. Meanwhile, Toyota Motor Corporation (ADR) (NYSE:TM)’s pickups have also done well: The strong-selling Tacoma, Toyota’s fifth-best-selling vehicle overall, has grown sales by nearly 23% in 2013, while the Tacoma also posted double-digit sales growth in the first quarter.

Still, it’s not enough for this automaker to sit patiently and hope rivals slip up. Japan’s inflationary drive will help Toyota battle American rivals such as Ford and GM in the U.S., but if the Camry and Prius can’t turn things around, it could be a long year for Toyota. There’s no reason to abandon this sturdy automaker just yet, but keep an eye on monthly sales. They’ll show just how well Toyota Motor Corporation (ADR) (NYSE:TM)’s coping with tough competition.

The article Is It Time to Hit the Brakes on Toyota? originally appeared on Fool.com and is written by Dan Carroll.

Fool contributor Dan Carroll has no position in any stocks mentioned. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford.

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