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Martin Weiss, Ph.D. discusses the demise of the American auto industry and the rise of Toyota. In this issue of Money and Markets, Dr. Weiss examines the long-term consequences for investors who fail to invest in quality, limit their horizons to the U.S., and do not take advantage of new opportunities outside the U.S.

Jupiter, Fla. (PRWEB) March 14, 2007 — “The demise of the American auto industry and the rise of Toyota is a megatrend rooted in more than economics. It’s a clash of cultures — a battle that pits quality against quantity. For Detroit it is a disaster that, in the absence of a dramatic turnaround, threatens to wipe out millions of jobs, destroy tens of millions of pensions, and even drag down the broader U.S. economy. But for those who invest beyond our shores, it’s a bonanza that promises to continue delivering more profits and prosperity,” says Martin Weiss, Ph.D.

The facts of this megatrend have become extreme and threaten to become even more consequential:

The torrent of red ink at Detroit’s Big Three is not ending: Ford lost $12.6 billion in 2006; DaimlerChrysler’s North America operations lost $1.5 billion in 2006; and General Motors lost $3 billion through the first nine months of last year.

Detroit’s vicious cycle of losses and contraction: Last year alone, the U.S. auto manufacturers laid off 150,000 workers. And looking ahead, their plans for downsizing sometimes look more like blueprints for liquidation. But it’s a vicious circle — more losses forcing more cutbacks and more cutbacks bringing still larger losses.

Detroit’s market share is shrinking, fast: As recently as 1998, the combined market share of Detroit’s Big Three in North America was 70 percent. Just seven years later, it was down to roughly 50 percent, and it’s still shrinking.

Toyota, the world’s most profitable auto manufacturer: In sales, Toyota is already bigger than Chrysler in the U.S. and is about to pass Ford. Toyota’s Camry is America’s best-selling car. Its Lexus is America’s most popular luxury brand.

Detroit’s cars are piling up on dealer lots while Japan’s are being snapped up: Chrysler cars sit on dealer lots for an average of 103 days. GM cars don’t get sold for 83 days, and Fords for 82 days. In contrast, new Hondas, BMWs and Toyotas are being driven off the lots by U.S. consumers within 32, 31 and 27 days, respectively.

A weaker dollar is not a salvation: The dollar has been sinking and the yen rising — in fits and starts — for decades. But over the long term, the cheaper dollar has done virtually nothing to help make U.S. car makers more competitive. When American auto manufacturers have faced adverse market conditions, they have typically resorted to offering easy money and discount financing. In contrast, when Japanese auto makers have faced adverse conditions, they’ve responded by pouring more capital into quality control.

“In January of 2001, a $10,000 in Toyota’s shares would now be worth close to $20,000. In contrast, that same ten thousand dollars invested in General Motors would be less than $6,000 today, even after a substantial rally in the stock this year. And with Ford’s shares, down to $3,000 with no sign of a bounceback any time soon. This single picture sums up, better than any other, the long-term consequences for investors who fail to invest in quality,” advises Dr. Weiss.

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About DR. MARTIN WEISS & MONEY AND MARKETS
Money and Markets (moneyandmarkets.com) is a free daily investment newsletter from Dr. Martin Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Weiss Research, Inc. is located in Jupiter, Florida. For more information about our editors, or to set up an interview, please contact Jennifer Moran at 561-627-3300 or visit moneyandmarkets.com