Toyota Still No. 2 After GM, but Competition Will Intensify in 2008 in New Markets

TOKYO January 24, 2008; Yuri Kageyama writing for the AP reported that General Motors just barely retained its lead over Toyota as the world's No. 1 automaker last year, but the neck-and-neck competition will only intensify in the coming year as the two rivals vie for sales in China, India and other newer, booming markets.

It was the solid sales growth in such emerging markets that gave General Motors Corp. its slight edge over Toyota Motor Corp. in 2007 global vehicle sales, allowing the U.S. automaker to keep its top spot for the 77th year.

Toyota said Thursday it sold 9.366 million vehicles last year globally, up 6 percent from 2006.

That was about 3,000 vehicles fewer than GM's tally announced Wednesday -- 9,369,524 vehicles sold, up 3 percent from the previous year.

The race between the two rivals highlights the phenomenal growth of Toyota, founded in 1937, which started out by imitating GM, an American icon, as well as Ford Motor Co.

Toyota, with its popular Camry, Corolla and Prius hybrid, is now the No. 2 seller in the United States, surpassing Ford, while GM has seen its market share in its home market shrink in recent years.

Both face a rapidly changing industry. A growing middle class in developing nations around the world is creating huge demand for cars -- and both companies are trying to tap into that.

GM's worldwide sales in 2007 were the second-best in its 100-year history. It set a records in China by selling more than 1 million vehicles and in Brazil with nearly 500,000. It also doubled sales in Russia. Toyota is a relative latecomer to China but is working hard to boost sales and production there.

In places like India, Tata Motors Ltd., which recently unveiled a $2,500 car, and more established manufacturers like Hyundai Motor Co. of South Korea are becoming key players. GM and Toyota have said they are also planning ultracheap models for India and other similar markets.

Still, analysts say it's just a matter of time before Toyota grabs the top spot from GM.

"It's definitely clear the momentum of growth is on Toyota's side," said Yasuaki Iwamoto, auto analyst for Okasan Securities Co. in Tokyo. "Toyota leads in the ability to develop new technology."

The sales gap between the two companies in 2006 was much bigger -- about 300,000 vehicles. GM sold 9.1 million vehicles while Toyota had 8.8 million.

Toyota is the clear leader in the new breed of "green" cars with its Prius, which runs on a gas engine and electric motor. It sold more than a million hybrids in the last decade, giving its brand a cache among environmentally conscious consumers. It plans to offer hybrid versions of all its models sometime after 2020.

The Japanese automaker is also investing heavily in technology that at first glance seems unrelated to autos, such as robotics. Last year, Toyota showed a human-shaped walking robot that played the violin.

Company executives were dead serious when they said they intend the robots to grow into a business as real-life helpers. The "partner robots" are slated for testing at hospitals, Toyota-related facilities and other places later this year.

Despite the media interest in the Toyota vs. GM rivalry, Toyota officials and executives have repeatedly said they are not interested in the numbers game and have even expressed worries about a possible backlash reminiscent of the "Japan-bashing" in the 1980s and '90s if they dethrone GM.

"We would like to become No. 1 in quality in product offerings and services, carefully making good products, and give true happiness to our customers," said Paul Nolasco, a Toyota spokesman in Tokyo.

Toyota, which is aggressively expanding overseas production, is forecasting that its sales will grow 5 percent this year to 9.85 million vehicles. GM does not give comparable sales forecasts.

In Detroit, GM spokesman John McDonald said the company's global strategy hasn't changed.

"We're not as concerned about who's winning," he said. "It's obviously a very tight race, and we look forward to 2008 and what the year holds ahead."

Toyota President Katsuaki Watanabe sounded a similar note, focusing instead on the importance of producing quality products that make consumers happy, while stressing his determination to reach the 9.85 million vehicle target.

"We are not concerned about who's first. Even No. 2 is fantastic. If a company grows complacent, it will quickly drop to No. 3 or No. 4," he told Japan's top business daily, The Nikkei.

AP Auto Writer Tom Krisher in Detroit also contributed to this report.