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Toyota (TM) stock price is about to form a dangerous chart pattern that could push it much lower in the coming weeks. It has dropped to $193, its lowest point since January 2024, and 255 below its all-time high, meaning that it is in a deep bear market.

Automotive industry is changing
 

The automotive industry is seeing major challenges as traditional companies become disrupted by smaller and fast-growing upstarts, especially from China. 

A Chinese company like BYD has come from ‘nowhere’ to become one of the biggest auto manufacturers in the world. It shipped over 3 million vehicles in 2023 as it overtook Tesla.

As a result, traditional companies like Toyota, General Motors, Ford, and Honda are in a new normal. 

Many of them pivoted strongly to the electric vehicles, motivated by governments and climate activists. To a large extent, these firms have not succeeded in their pivot.

Toyota, nonetheless, has done well because of its unwavering support for Internal Combustion Engine (ICE) and hybrid vehicles. This performance is evidenced by Toyota’s deliveries in 2023, which soared to a record high. 

Toyota maintains a leading market share in the automotive industry, which explains why its stock has done better than other traditional automakers.

The company has also emerged as a leader in battery technologies. It is working on solid-state batteries that ensure fast charging and higher energy density. It hopes to start manufacturing and equipping these batteries in its vehicles either in 2026 or 2027. 

As a result, Toyota vehicles will travel for longer on a single charge, solving the range anxiety issue that many consumers have. Toyota is then expected to be a leader in ICE, hybrid, and fully electric vehicles.

Toyota growth is continuing
 

Toyota’s business has been in a steady growth path for a long tme. Its annual revenue dropped from $257 billion in 2019 to over $226 billion in 2020 because of the pandemic. Since then, the numbers have grown substantially and the company attained sales of $275 billion in 2023. Its annual profits moved from $18.9 billion in 2019 to over $32 billion in the last financial year.

Toyota’s automotive revenue rose by 22% in the last financial year while its financial services and the other segment grew by 24% and 11.7%, respectively. In contrast, Tesla, the biggest company in the industry by valuation, has seen its revenues soften in the past few quarters. 

Toyota’s sales are growing across all its regions, Its Japan sales rose by 195 while its North American, Europe, and Asia business rose by double-digits.

The next important catalyst for the Toyota stock price will be its Q1’25 earnings scheduled for Thursday this week. These numbers will provide more details about Toyota’s business performance this year. 

Analysts believe that its business continued doing well this year, helped by the growing demand of its hybrid vehicles. However, there are signs that the momentum is easing. Just this week, the company said that its global output dropped slightly in June because of China and Japan.  Also, its global sales dropped by 2% in April-June period. 

The biggest Toyota competitors have reported weak results. Ford stock price dived by over 27% from its highest point this year as its sales momentum disappointed. Its revenue came in at $44.81 billion while its earnings per share came in at 47 cents because of warranty reserves. 

Similarly, General Motors stock price has dropped to $44, its lowest point since May 31st and by 12% from its highest level this year. This decline happened even after the Detroit manufacturer published strong results, with its revenue soaring to $47.97 billion.

Perhaps, the worst-performer has been Stellantis, the parent company of Maserati, Jeep, and Chrysler. Its stock has crshed by over 40% from its highest point this year and is hovering at its lowest point since July last year. 

The company’s financial results were weak, leading to multiple analyst downgrades, including from Deutsche Bank. Renault has also tumbled from 54 euros to 44 euros amid slow growth.

Toyota stock price analysis
 

TM chart by TradingView

Meanwhile, the Toyota share price is not doing well too. It has plunged from over $254 to the current $195. Along the way, the stock has moved slightly below the key support at $193, its lowest swing on June 17th and the lower side of the double-bottom pattern.

Most importantly, the stock is about to form a death cross as the 200-day and 50-day moving averages approach a bearish crossover. In most cases, a death cross leads to a big drop in an asset since it means that bears have prevailed. 

Toyota stock has also moved slightly above the 50% Fibonacci Retracement point. Therefore, the shares will likely continue falling as sellers target the 61.8% retracement point at $176. The alternative scenario is where the stock bounces back and retests the resistance point at $200.

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