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Due in no small part to fuel efficiency, the prospect that Toyota might beat General Motors in global sales this year had been looming for some time, though the prospect still seemed very much in Detroit’s rear-view mirror… until it happened this week.
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Toyota Motor Co. this week reported that it sold 9 percent more vehicles in the first quarter than a year ago, bestowing the Japanese giant the title of world’s top automaker, as its sales surpassed General Motors’ for the first time. Toyota sold 2.35 million vehicles, according to a company spokesperson, about 109,000 more than GM sold in the first quarter.
GM still leads Toyota in the huge U.S. market, though that is on track to change over the next few years barring big changes at either company.
The news, though hardly surprising, “caps a remarkable surge by Japan’s No. 1 automaker by output, which had a little more than half GM’s worldwide sales volume a dozen years ago,” as The Wall Street Journal puts it.
More to the point, this “remarkable surge” seems largely symbolic. The New York Times calls it a “historic shift,” and BusinessWeek does not mince words:
There are milestones — and then there are ground-shifting, era-smashing milestones. And word on Apr. 24 that Toyota dislodged General Motors as the world’s biggest seller of cars and trucks for the first time ever (at least on a quarterly basis) is no ordinary bit of business news.
Save for two periods when GM production faltered because of strikes in the 1970s and 1980s, the automaker had been on top since 1931.
Toyota has downplayed its steady assault on the global crown, repeatedly stressing its quality focus while taking measures to avoid a politically charged backlash in North America. Toyota now builds more than half of its vehicles in the U.S., and earlier this month, it tapped an American to take a seat on its all-Japanese board.
An op-ed appearing in today’s Detroit Free Press says:
It doesn’t matter who sells the most cars. The focus should be squarely on improving quality and efficiency, on innovation. Do those things really well — as Toyota does — and sales will take care of themselves.
Yet as the WSJ points out, Toyota has had bigger manufacturing-quality recalls in the U.S., and its engineering staffs are straining to keep pace with a growing array of vehicles.
This notwithstanding, Toyota’s success has been helped not only by the public’s want for the automaker’s hybrid technology, but also for its full lineup of fuel-efficient cars at a time when the Detroit manufacturers were stacking up inventories of trucks and sport utility vehicles (SUVs).
In fact, the average fuel efficiency of U.S. cars and trucks sold in the 2006 model year “showed no improvement” from the prior year at 25.4 miles per gallon, as “increased sales of fuel-thirsty cars offset slightly more efficient trucks,” according to the first new data in two years.
The figures, reported by the National Highway Traffic Safety Administration, will likely add to the push in Washington for higher efficiency standards.
While Toyota and Nissan Motor Co. raised their averages for their North American-built cars and trucks, Detroit automakers turned in a mixed performance with “flat to lower results for cars and only DaimlerChrysler AG posting a gain in truck efficiency,” according to a report by The Detroit Free Press. (By the way, yet another report from the Detroit paper says that Daimler is expected to name the top Chrysler bidder “by the end of next week,” although “top DaimlerChrysler AG officials are expected to continue to meet with potential buyers in New York City this week and next, a person familiar with the process said.”) Honda Motor Co.’s figures held steady in cars but fell for trucks.
The National Highway Traffic Safety Administration report estimates automakers’ progress toward meeting the standards set by the corporate average fuel economy (CAFE) program of 27.5 mpg for passenger cars and 21.6 mpg for pickups, vans and SUVs.
Based on estimates from mid-model year sales, the report said automakers were on track to average 25.4 mpg across all vehicles sold, the same as in the 2005 model year.
For more than two decades, the automotive industry in the U.S. has deflected attempts to force improvements in vehicle mileage. Now, as IMT readers are well aware, Detroit is getting hammered on the issue from almost every side, “and even industry-friendly lawmakers say change is looming,” The Washington Post emphasized this week.
Several lawmakers want to require U.S. automakers to meet steep annual increases in fuel economy rules. In private meetings this year, House Energy and Commerce Committee Chairman John Dingell said that “a proposal that alters fuel economy standards is likely in 2007 — and that Detroit will not like everything in it.”
The political movement toward a change in CAFE standards has steadily picked up momentum as high gas prices and anxiety over global warming have gripped the public.
The Detroit paper’s aforementioned op-ed also says today, “Global demand for cars and trucks is rising rapidly, as people in China, India and other emerging economies become more affluent. There are spoils aplenty for well-run auto companies.”
In fact, going forward, the battle for dominance in the world auto market likely will shift away from the U.S. market — where Toyota benefited for years from a legacy of mistakes by Detroit’s automakers — to emerging markets such as China and India, “where energetic local automakers are learning how to compete by reading Toyota’s playbook,” WSJ surmises.










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In a free market, the best product for the lowest price will always win out. GM gets what it deserves. One of GM’s biggest problems are the shackles of the labor unions. Another problem, I think, is lack of foresight or long-range planning.
Good morning, I think that we are seeing a time when the Big Three will become the little three and other, more managed and planned auto industries will emerge as the front runners.
This, though in fact, gives us as Americans no right to abandon our own people’s efforts and thus add to this problem. I for one will always drive a Ford, GM or Chrysler product as they were and still are part of our original heritage. I know that a lot of people are employed by the other auto makers but still, where did it all start with.
I drive a Ford truck because it serves me better in my line of work and I drive a GMC Yukon for a family vehicle. I previously owned a Mercury car but the gas economy with it and the Yukon Mercury are equal and sometimes better with the Yukon so thus I ride more comfortably. We need to be aware of all this and not forget who helped us get here. WD