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John Wilson
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Toyota’s Sales Projections Show It Surpassing G.M.
By MARTIN FACKLER
The New York Times
Published: December 22, 2006
TOKYO, Dec. 22 — Toyota Motor said today it plans to sell 9.34 million vehicles next year, a figure that analysts said would put it ahead of troubled General Motors as the world’s largest auto company.
Toyota reported global group sales this year of 8.8 million cars and trucks, below G.M.’s 2006 sales forecast of 9.2 million vehicles. But the figures released today showed the two rival car giants on starkly different trajectories, with Toyota expecting to add a half million vehicle sales next year, at a time when G.M. is shuttering 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, 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.
“Does being No. 1 matter? It matters for G.M., and for America,” said Hirofumi Yokoi, an auto analyst at CSM Asia. “It becomes a political issue when America gets passed in a core industry. Toyota will have to be even more sensitive and cautious in the U.S. market.”
Toyota’s emergence as No. 1 would also realign the global auto industry. The Japanese car company would become the new industry benchmark, say analysts, and one that would be tough to match. While G.M.’s strength in recent years has been its finance arm, Toyota’s success is grounded in its formidable manufacturing prowess. As the world’s most profitable carmaker, it also has the cash to invest heavily in new technologies and products, analysts said.
Analysts also said reaching the top would not exhaust Toyota’s opportunities for growth. They said Toyota will continue to gain in the American market, where higher gas prices have increased the popularity of smaller, more fuel-efficient vehicles. They said Toyota was expanding in developing markets, particularly China, and into alternative-energy vehicles, like hybrid and fuel-cell technologies.
Toyota’s rise would also prove a victory of sorts for its unique corporate culture, the so-called Toyota Way, which is rooted in an obsession with craftsmanship and constant improvement, or “kaizen.” Analysts said the Toyota Way would likely become enshrined as the industry’s gold standard, and the model to mimic or surpass for new challengers from South Korea and China.
“This proves that the Toyota Way is more than just an odd, quirky theory,” said Chester Dawson, author of “Lexus: the Relentless Pursuit.”
“Being No. 1 means Toyota now sets the standards that everyone has to beat,” he said.
For Toyota, the immediate concern appears to be avoiding any political fallout from passing G.M. This morning, Toyota’s president, Katsuaki Watanabe, treaded lightly around the issue of his company’s overtaking G.M., while announcing may open another factory in North America. At a press conference in Nagoya, near his company’s Toyota City headquarters, Mr. Watanabe said passing G.M. “is just a question of results,” and not a significant event for Toyota, according to Bloomberg News.
Toyota is also considering another factory somewhere in North America, Mr. Watanabe said. The company just opened a $1.28 billion pickup truck plant in San Antonio, Tex., last month, and has another factory under construction in Woodstock, Ontario slated to open in 2008.
Toyota has been building plants in the United States since the 1980s, partly to blunt trade criticism. The expanded production will help Toyota to meet U.S. sales gains without increasing exports from Japan, a Toyota executive vice president, Tokuichi Uranishi, said, according to Bloomberg News.
Mr. Watanabe also addressed Toyota’s growing number of recalls this year, which have tarnished the company’s reputation for sterling quality. In Japan alone, Toyota has recalled 1.2 million vehicles this year, prompting the transport ministry to order the company to improve quality control.
“There will be no growth without quality,” Mr. Watanabe told reporters, according to The Associated Press. “We’d like to continue our efforts to make good products that win support from our customers.”
Analysts say the growing number of defects could seriously undermine the company in the long run, especially if they are a symptom that Toyota is losing its grip on quality control as it charges forward with expansion.
“Now that it’s Toyota’s turn on top of the industry,” said CSM’s Mr. Yokoi, “Toyota has to figure out how to keep from following G.M. into decline.”
So far, the recalls have not slowed Toyota’s pace of growth. The company said today that it and its affiliates expect to build 9.42 million cars and trucks next year, up from 9.04 million this year. The Toyota group includes two subsidiaries, truck-maker Hino Motors and Daihatsu, a builder of compact cars.
Toyota also gave a regional breakdown for next year’s forecasted sales of cars built by the parent company, which bear the Toyota and Lexus brands. The largest market will remain the United States, where sales are expected to rise 6 percent to 2.68 million vehicles.
The company also said it expects a 9 percent rise in Europe and a 15 percent gain in Asian markets, including China.
Asked if becoming the industry leader would have any real impact on Toyota’s core business of building cars, most analysts said no. They said Toyota would likely keep doing what it has been doing so far: grabbing global market share by producing reliable, high-mileage vehicles.
Some also noted with irony that being No. 1 has not helped the current titleholder, G.M., which lost $10.6 billion last year.
“Being on top won’t change anything in terms of share price or earnings,” said Atushi Kawai, an auto analyst at Mizuho Investors Securities in Tokyo. “In fact, if you look at who’s been No. 1 until now, you see that there really aren’t many benefits at all.” |
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Fri Dec 22, 2006 4:34 pm |
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Proud Republican
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See this is because of the union and Michael Moore.
Japan & China's work force are hard workers. |
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Fri Dec 22, 2006 7:30 pm |
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Adam
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| What does Michael Moore have to do with Toyota's success? Toyota's #1 selling car in the U.S. the Toyota Camry is built in the U.S. The Union's Jobs bank where you get paid not to work is a killer for GM though. It also hurts GM to not be able to close plants due to union contracts. |
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Sat Dec 23, 2006 12:13 pm |
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John Wilson
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Oh so it's the UNION'S fault, Adam?
Uh, I don't think so.
GM management is killing GM. Let's look at the evidence shall we?
1. Designing and producing the ugliest, gas guzzling cars for the past 30 years. There hasn't been a Buick I wanted to drive since I can remember. Same for Pontiac and Oldsmobile!
2. Killing the EV-1 electric car. They had a waiting list for this car! It was the Toyota Prius of the mid-late 90's! They were awesome cars produced in Lansing! GM made one of the biggest blunders in corporate history!
http://www.imdb.com/title/tt0489037/
3. Focusing on the bottom line and not the customer or his/her needs and wants. Blame Roger Smith - that sonofabitch also killed an entire city - Flint.
4. The union builds the cars the company tells them to. They DO NOT run the company. They DO NOT design cars or market them. If you have amazing cars to sell and people want them, you will never have labor problems.
FACT: GM management is GUILTY of killing GM. |
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Sat Dec 23, 2006 3:56 pm |
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Adam
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I didn't say it was the union's fault but I think it does hurt a company to pay people not to work (Jobs Bank) and most corporations prefer to be able to make management decisions about when and which plants to open/close when/where etc. Health care costs also hurt GM as well as pensions etc. Overall you could right a book on GM's downfall and Toyota's rise.
1. GM was making a lot of money on SUV's and losing money on small cars. Now they are quite possibly losing money on Suv's and on small cars. I have read that Gm also needs to sell more cars to be able to cover their legacy costs (pensions). If you were losing money on small cars but making money on SUV's wouldn't you prefer to make money instead of losing money?
2. I doubt GM would have killed the EV-1 if they thought it would be a big money maker.
3. I think Toyota does have better product research. Product research and design does cost a lot of money though so Toyota should be able to spend more on this.
4. Management is subject to the will of the owners of the company. A lot of management decisons of GM were typically based on maximizing profits. For example cutting back on design or producing models most likely to succeed.
Overall I do think GM does have a bad cost structure though that does negatively impact it. Toyota's obviously sell for more money but they also cost less to produce which puts Gm in a bad position if your trying to improve product design etc. On another note a lot of equipment Gm uses is produced by companies in Japan. I've always wonder if Toyota has better equipment to produce cars. In business that's called a competitive advantage. if Japanese companies produce all the high tec equipment, stamping dies and equipment that could possibly give Toyota a competitive advantage.
I've also heard that for a decade or so GM didn't want to build better cars due to legal issues because there market share was so big and they didn't want to get split up by the U.S. government. If GM would have been allowed to be fully competitive they might be in a stronger position right now.
On another note if GM's problems were striclty with management then why wouldn't Toyota just buy up Gm fire all the management and replace it with it's own? I'm sure Toyota could get a very good deal on GM right now. |
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Sat Dec 23, 2006 8:15 pm |
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jamesgpeck
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| Toyota has a culture of continuous improvement. GM does not. End of Story unlerss GM wants to adopt one also which is easier said than done. |
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Fri Dec 29, 2006 9:47 am |
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pissed off ma ma bear
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| you know,,,its called supporting your fellow neighbors,,,,buying what your nieghbor builds so they can survive,,,thats what is wrong with this new so called Generation of foriegn car luvers,,,you dont remember what they did to us in world war two,,,they are laughing thier asses off,,,soon they will own the USA,,,and I would be very careful what you say about UAW workers , since this is still an Automotive town,,,why do you think our Economy is suffering in Michigan???? Keep buying and supporting Japan,,,,the bottom line is the money they make on the cars made here still goes back to Japan banks you Morons,,,I will always be a proud driver of a GM product |
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Thu Jan 04, 2007 12:17 am |
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Adam Ford
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quote:
pissed off ma ma bear schreef:
you know,,,its called supporting your fellow neighbors,,,,buying what your nieghbor builds so they can survive,,,
The problem is our neighbors in the South have the money to buy plenty of the Camry's they produve down there. Yes the number one selling car in America is built in America but it's not a GM. Businesses seem to like to locate in right to work states as well. Michigan is getting killed. Young people my age are moving away. |
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Thu Jan 04, 2007 1:13 am |
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Guest
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quote:
Roscoe Van Zandt schreef:
Oh so it's the UNION'S fault, Adam?
Uh, I don't think so.
GM management is killing GM. Let's look at the evidence shall we?
1. Designing and producing the ugliest, gas guzzling cars for the past 30 years. There hasn't been a Buick I wanted to drive since I can remember. Same for Pontiac and Oldsmobile!
2. Killing the EV-1 electric car. They had a waiting list for this car! It was the Toyota Prius of the mid-late 90's! They were awesome cars produced in Lansing! GM made one of the biggest blunders in corporate history!
http://www.imdb.com/title/tt0489037/
3. Focusing on the bottom line and not the customer or his/her needs and wants. Blame Roger Smith - that sonofabitch also killed an entire city - Flint.
4. The union builds the cars the company tells them to. They DO NOT run the company. They DO NOT design cars or market them. If you have amazing cars to sell and people want them, you will never have labor problems.
FACT: GM management is GUILTY of killing GM.
Roscoe,
I believe you're right, but for different reasons:
Management is responsible for the following:
1) Instead of creating a corporate culture that emphasized continuous improvement and quality, they allowed for and promoted complacency.
2) Bowing to the the demands of the union and agreeing to pay an artificially inflated wage and benefits to unskilled workers.
Being overly generous to a workforce instead of allowing the market to dictate wages will ALWAYS catch up with and destroy a company in the long run. Now it's time for GM and the UAW to "pay the piper." |
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Thu Jan 04, 2007 7:45 pm |
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Ted Jankowski
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Notice Guest isn't identified. Mr. Roscoe Van Zandt did a pretty good job outlining the problem and still jealousy takes over. I find it amazing that the Japanese auto worker makes better wages and benefits in Japan! They passed the USA some years ago! This isn't NEW HEADLINE!
After working in GM as a supervisor. It is pretty clear that Management has been the problem. And continues to be. Workers on the line have been known to point out problems and present solutions that save the company money! Yet who gets the bonus for running the company into the ground?
GM purposely designs their cars to FAIL. YEs they do. They go out of their way to design in a lifespan to their cars. Why does a Honda civic go on average 80 thousand miles and only need tires? Yet the average Malibu has had brakes on the front twice rotors all the way around and rear brakes once. Why do their wheel bearings go out at 30-40 thousand miles? Need Struts, and least three alignments by then?
And what part of that do you blame on the Union employee? All's they did was put together the product. They didn't design it to fail! They didn't determine that the lifespan of those parts was only 45 - 50 thousand miles.
Then when there is a problem. Say the Plenums melt at 25,000 miles because they failed before the warranty was up? THen instead of replacing the problem. They just have a campaign to have the dealer put in stop leak. What do you think all the owners of the 3800's thought after they paid the dealer 800.00 to replace a part out of warranty that GM already knew was bad? How many of those people do you think bought GM vehicles again?
C'Mon guest stop crying about what they make! If you want to talk about WASTE at GM. I have pages of that I can write from first hand experience. Not just at one plant either!
Oh and price of the vehicle... the top 5 people at GM making more in wages than a whole plant of workers? Not a one of those top five ever did a thing to build or help sell a car! BUt they have determined to run out almost every company in the US that used to supplied high quality parts for the cheapest outsourced vender they could find. |
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Fri Jan 05, 2007 12:47 am |
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Guest
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quote:
Ted Jankowski schreef:
Notice Guest isn't identified. Mr. Roscoe Van Zandt did a pretty good job outlining the problem and still jealousy takes over. I find it amazing that the Japanese auto worker makes better wages and benefits in Japan! They passed the USA some years ago! This isn't NEW HEADLINE!
After working in GM as a supervisor. It is pretty clear that Management has been the problem. And continues to be. Workers on the line have been known to point out problems and present solutions that save the company money! Yet who gets the bonus for running the company into the ground?
GM purposely designs their cars to FAIL. YEs they do. They go out of their way to design in a lifespan to their cars. Why does a Honda civic go on average 80 thousand miles and only need tires? Yet the average Malibu has had brakes on the front twice rotors all the way around and rear brakes once. Why do their wheel bearings go out at 30-40 thousand miles? Need Struts, and least three alignments by then?
And what part of that do you blame on the Union employee? All's they did was put together the product. They didn't design it to fail! They didn't determine that the lifespan of those parts was only 45 - 50 thousand miles.
Then when there is a problem. Say the Plenums melt at 25,000 miles because they failed before the warranty was up? THen instead of replacing the problem. They just have a campaign to have the dealer put in stop leak. What do you think all the owners of the 3800's thought after they paid the dealer 800.00 to replace a part out of warranty that GM already knew was bad? How many of those people do you think bought GM vehicles again?
C'Mon guest stop crying about what they make! If you want to talk about WASTE at GM. I have pages of that I can write from first hand experience. Not just at one plant either!
Oh and price of the vehicle... the top 5 people at GM making more in wages than a whole plant of workers? Not a one of those top five ever did a thing to build or help sell a car! BUt they have determined to run out almost every company in the US that used to supplied high quality parts for the cheapest outsourced vender they could find.
Ted, this may all be true regarding piss poor management and vehicle design. But the truth remains the largest expense as a percentage of revenue for general motors (or any company for that matter) is payroll to the general laborers. And I'm sorry, but NOBODY deserves $28 an hour plus huge benefits for turning a screw driver.
Yeah, yeah, yeah, I know your response......"what about the millions paid to the upper management"...........I agree it's not justified and should be paid as incentives........but this expense is dwarfed by the expenses of wages and benefits due to the general labor force. |
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Fri Jan 05, 2007 7:15 am |
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Ted Jankowski
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| That's such an out and out untrue statement. It would suure be nice to get the whole truth about wages. What the Real percentages were, How much of those "Wages" where hourly and how much was management, how much was reseach, etc. Considering that the surburban is a BIG profit maker for GM and also the Pick Up. While working in those plants I was told that wages and benefits where under 13 percent of the COST! not the selling price. While this was some years ago. I wonder how much of the Managements MISMANAGEMENT is added in with the "Wages" so as not to make themselves look bad! Don't beleive everything you read. |
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Fri Jan 05, 2007 7:59 am |
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