With an ingenious development and launching of the hybrid vehicle at the turn of the century, Toyota Motor Corp (TM) has taken over Ford Motor Company (F) as the world's #2 automaker and has its sight set on unseating General Motors (GM) as the largest. And it's not a question of if, but when. Net losses for Detroit's Big 3 automakers total into the tens of billions since 2005 and will likely continue for quite a while longer as massive layoffs and restructuring plans are being carried out. After a previous failed buyout attempt of Chrysler Corp in the mid-90's, billionaire investor Kirk Kerkorian has resurfaced again and last week offered $4.5 billion in cash for the troubled Chrysler division of DaimlerChrysler (DCX). To get a sense on how far things have tumbled so fast, this amount is only a fraction of the $36 billion that DaimlerBenz paid for Chrysler Corp not even ten years ago.

Comparing Toyota's share price appreciation over the last two years to the likes of Ford, General Motors, and DaimlerChrysler is almost comical (although it should be noted that DCX outperformed Toyota in recent weeks, but likely due to Chrysler being on the selling block). Instead of caving in to the short-lived excess of the SUV craze since the turn of the century, Toyota maintained a minimalist approach and branded itself for the long term via its new flagship product, the Prius. The Big 3 extended itself too much with these gas-guzzling monstrosities and now is paying dearly with much unsold inventory and no identity for the future. Toyota had the clairvoyance to think one step further and see that the better long-term strategy stems from vehicles that will save gas (and the consumer's money spent on gas), not expend it. Its reward: a rapid rise to the #2 slot in the auto industry rankings and the brand equity as the company that made the fuel-efficient car "cool".

But Toyota's successes need not stop there. As mentioned in a previous post on the utilities sector (and subsequently a common theme among articles written in this section of ThePanelist), progressive-minded companies at the top of their peer groups have in their hands the opportunity to shape the industry in their favor going forward. Congress is currently being pressed for stricter emissions and fuel efficiency standards within the automobile sector. Even though it is a foreign based company, Toyota can still join in on that movement. With plans to boost overseas production by 40% by 2008, I hope it does.

Toyota has taken the crowded U.S. auto market by storm and is looking to make still further inroads with its new, 21st century moniker as a "green" company. This will be accomplished via its fleet of flex-fuel vehicles that are set to hit the U.S. highways in 2008. That is, the company will introduce vehicles that are equipped to run on the E85 blend of ethanol-based fuel, a leading candidate as the transportation fuel of the future. However, a major bottleneck in the commercialization of this fuel is its sparse distribution. There are only approximately 1,100 filling stations across the entire country, with the bulk of them situated in the Midwest. This number will need to be increased exponentially if E85 fuel is going to work inside our borders. Nonetheless, with Toyota paving the way for the automobile sector in this green revolution, the company can also exert the most influence in the public and private sectors to accomplish this task. Well, if it so chooses to…

Detroit, there is a new sheriff in town. He may also be your remedy.

Disclaimer: I do not give investment advice. Do your own research. Do not rely on anything in this weblog to make investment decisions. I only talk about investment opportunities that I think are interesting and worth looking at. Consult an investment professional familiar with your specific financial situation before buying or selling any security.

Disclosure: I do not own any of the stocks above but may consider buying Toyota in the future. With DCX having found a suitor for one-half of the company, I would not buy their stock at this point as I believe its best buying opportunity has already passed. It will be a long time before I would even consider buying shares of F or GM.