Toyota gives the Big 3 a run for their money

[Ming]

Toyota gives the Big 3 a run for their money
Danny Hakim
New York Times

DETROIT Toyota may not quite be the world's largest automaker, based on vehicle sales, but it is firmly buckled in the industry's driver's seat.

That reality was reinforced last week when Toyota reported $10.2 billion in earnings for its latest fiscal year, which ended in March, the most ever made in a single year by a Japanese company.

Toyota made more than General Motors, Ford Motor and DaimlerChrysler combined. In fact, its earnings were more than double the combined earnings of those companies in their most recent fiscal years.

"It has the kind of momentum in the market that hasn't been seen since the glory years of GM's heyday," said Peter DeLorenzo, an industry consultant.

Consistent profits have allowed Toyota to develop environmental technologies, like hybrid engine systems, and take risks, like starting a youth-focused brand, Scion, DeLorenzo said. And it has increased the pressure on everyone else.

Toyota's recent earnings report coincided with an unusually blunt speech to the Detroit Economic Club last week from the chief executive of one of the U.S. auto industry's largest suppliers, Richard Dauch of American Axle Manufacturing.

"Like it or not, Detroit is in the cross hairs of world automotive competition," he said in his speech. Referring to the United States, Dauch added, "Never before in my nearly 40-year automotive career have I seen General Motors, Ford and the Chrysler Group all losing market share at the same time."

Four decades ago, GM alone commanded more than half of the American market. Now GM, Ford and DaimlerChrysler, which includes Mercedes, have about 62 percent combined, according to Ward's AutoInfoBank. In the past five years, Toyota's share of the U.S. market has risen to 11.9 percent from 8.7 percent.

Detroit's problems are the country's problems. GM, Ford and the Chrysler division provide health and pension benefits to hundreds of thousands of citizens and are critical to the economy of the Midwestern states. Toyota, however, has also become critical to some parts of the U.S. economy, employing about 31,000 people at its various plants around the country.

For Detroit, there have been some positive signs. GM, the world's largest automaker by volume, has become increasingly competitive in its productivity and by many quality measures, though it has suffered a spate of recalls recently. Ford's chief executive, William Clay Ford Jr., has led the company out of steep losses and back to profitability. Chrysler has a new wave of cars and trucks coming out.

But losses in market share and the reliance of the traditional Big Three on rebates and cheap financing are among the things that make many big investors wary.

Toyota is now behind GM and in a dead heat with Ford as the world's second or third largest automaker, depending how one counts, with DaimlerChrysler trailing them all. Toyota aims to grow its global market share to 15 percent by the end of the decade, just above where GM is now.



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[jro4566]

Yup, it's very sad but it's the truth...

[tgagneguam]

This is yet another article referring to the same debate. While these types of articles get redundant, they do serve one useful purpose: they continue to remind Detroit that their work will never been done. Detroit's historical myopia is something that I find really frustrating.

[Smaart Aas Saabr]

Wow... so building a better car really IS the key to success...

Why was GM so successful that the US Supreme Court wanted to spin off Chevrolet in the early 1960's? Because GM products were the best availible for the price, and looked darn good doing it. Now Toyota hasn't even come close to GM's current marketshare and everyone complains?