Toyota to Surpass GM

Toyota is projecting sales of 9.4 million cars next year which would put it just ahead of rival GM. Further, the two companies are taking very different directions. Toyota plans on increasing car sales by 500,000 while GM is closing plants and laying off workers.

Surpassing G.M. would be a crowning achievement for Toyota, a company that got its start in the 1930s by reverse-engineering G.M. and Ford cars, and that spent decades catching up with Detroit. It would also end G.M.’s 81-year reign over the global auto industry, and mark another step in the rise of Asian carmakers.

However, there could be some problems for Toyota as well,

However, becoming the global leader would also have its pitfalls for Toyota, analysts warned. The Japanese automaker could become a victim of its own success and follow G.M.’s decline if it grows complacent, or lets quality control slip amid its rapid expansion, analysts said. Being at the top could also make Toyota a fatter target for critics, particularly in Congress, where the company’s rise could fan a protectionist backlash, analysts said.

While there is a chance that Toyota wont surpass GM next year, it seems like a good bet that eventually it will.

FILED UNDER: Economics and Business,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. Dave Schuler says:

    Prepare for accelerated lobbying by Ford and GM for bailouts in the areas of health care and employee pensions. They’re hoping to be indemnified against the implications of 30 years worth of bad management.

    I deal with Ford on a regular basis and I’m extremely skeptical of its ability to “shrink to grow”. I’m not skeptical at all about its willlingness to go to Uncle Sugar for a bailout.

  2. McGehee says:

    The employee health care and pensions problem is real, though — and caused by decades of bad practice throughout American industry, encouraged by wrongheaded government labor policy.

  3. I used to sell into the automotive industry. You could tell that Toyota wanted respect. When they became the third largest, they even polled public perception about calling them one of the big three.

    Maybe if they become the world’s largest car company they can get the respect they crave.

  4. floyd says:

    mcGehee;do you mean to say that companies should not provide pensions or health insurance for which they have contracted? GM’s “problems” are NOT the fault of opulent labor contracts. these “problems”are the result of an obscene shell game ,played with corporate profits, and the shuffling of assets between GMAC ,GM manufacturing, and wholly owned supplier groups like DELPHI. This game was played to gut the company and destroy the UAW.

  5. McGehee says:

    do you mean to say that companies should not provide pensions or health insurance for which they have contracted?

    No. You are obviously reading your own biases into my words.

  6. floyd says:

    dave; Ford’s domestic “shrink to grow” approach is destructive to the company primarily because they want to cut muscle and keep fat [worldwide] they will return to former prominence only when they return to their core business of producing solid, cheap, reliable Ford branded cars on a limited number of platforms produced in the country of sale.Not glamorous but effective.

  7. Dave Schuler says:

    From what I’ve seen in my nearly 20 years of interactions with Ford they cut the muscle long, long ago. Now they’re cutting bone.

  8. floyd says:

    McGehee; a simple yes or no would suffice.mine aren’t the only biases showing.[grinz]

  9. floyd says:

    Dave, Ford being a worldwide organization with lots of capital employed, I hope your wrong. i’m only 55 and I’m not sure if my pinto can last the rest of my life![lol] Any team is only as good as it’s coach though and something has to change,organization wise.

  10. DC Loser says:

    Ford, as late as the late 90s, was making money hand off fist, and I recall their CEO bregging about the pile of cash (in the 10s of billions) the company was sitting on. They had made a series of great vehicles which sold widely since the mid-80s (the Taurus, Explorer, etc.) But somewhere the innovation stopped. Ford got addicted to the SUV gravy train and never got off. They bought trophy marques like Jaguar, Land Rover, Volvo, almost all of which have been big money drains on the company. Besides the Mustang, can anyone name one Ford car that people actually WANT to buy, without discounts? I shudder to think 10 years ago, I almost went to work for them at one of their main suppliers.