Toyota now No. 1

Japanese carmaker takes crown from longtime sales king GM

January 22, 2009|By From Sun news services

Toyota Motor Corp. has ended General Motors Corp.'s 77-year reign as the world's largest automaker after avoiding the worst of the meltdown in global auto demand.

GM's 2008 sales fell more than 11 percent to 8.4 million vehicles, the company said yesterday. Toyota said Tuesday that it posted a 4 percent drop to almost 9 million sales.

Toyota seized the crown after boosting sales 70 percent since 1999 on demand for fuel-efficient cars. Still, bragging rights may do little to revive growth amid a recession that has forced the Japanese company to forecast its first operating loss in 71 years and spurred Detroit-based GM to seek a government bailout.

Demand is still shrinking, with U.S. industrywide sales in January possibly falling to an annualized rate of fewer than 10 million vehicles because of fewer fleet purchases, GM's chief sales analyst, Mike DiGiovanni, said yesterday. That compares with 13.2 million units in 2008 after an annual average of about 16 million during the past decade.

"I don't think being No. 1 in vehicle sales means much at all to the American consumer," DiGiovanni said in a conference call in response to GM's No. 2 status.

"I think what matters most to the consumer is strong brands and strong products. And the key thing right now with what the industry is going through now is viability and profitability."

GM took the world sales title from Ford Motor Co. in 1931, in the throes of the Depression, and retained it through World War II, the boom years of the 1950s and 1960s, and the first five decades after Toyota began selling cars in the United States.

Toyota's move into the top sales spot wasn't unexpected. The automaker nearly leapfrogged GM in 2007, selling about 3,000 fewer vehicles than the U.S. company did that year.

While the global sales title is largely symbolic, being No. 1 for the first time might put a lot of pressure on Toyota because other automakers will be chasing it, said Rebecca Lindland, an IHS Global Insight analyst in Lexington, Mass.

GM is trying to reduce labor costs, debt, dealers and brands to show it should be allowed to keep a promised $13.4 billion in U.S. loans to help restructure.

Toyota also is feeling the pinch in worldwide auto demand, with its first sales decline in 10 years. The automaker said earlier this week that Executive Vice President Akio Toyoda, a grandson of the company's founder, will become president in June, succeeding Katsuaki Watanabe, who will be vice chairman.

Toyota's sales milestone wasn't announced internally at the company's U.S. headquarters in Torrance, Calif., and no acknowledgment is planned, said Mike Michels, a spokesman. "There aren't going to be any parties or banners," Michels said. "From the standpoint of consumers, they are pretty oblivious to it. Corporate rankings just don't show up in customer surveys as a reason for purchasing a car."

Industrywide sales in the U.S., the world's largest auto market, fell in 2008 under the weight of record first-half fuel prices and the spreading recession. GM's domestic sales tumbled 23 percent, outpacing the industry's 18 percent slide.

Losses at GM have totaled about $73 billion since the end of 2004. The automaker has pared profit-sapping sales incentives and moved to close more than a dozen factories and other locations in North America.

The company received $5.4 billion from the U.S. Treasury yesterday, after paperwork delayed a payment at the end of last week. GM Chief Operating Officer Fritz Henderson had said that GM couldn't continue to operate without the U.S. money.

After announcing a new survival plan in July that included asset sales and cuts in salaried jobs, GM was overwhelmed after the September bankruptcy of Lehman Brothers Holdings Inc. hurt the ability of buyers to get auto loans and cut demand, said Alan Baum, director of automotive forecasting for consulting firm Planning Edge in Birmingham, Mich.

In related auto industry activity, Chrysler LLC, which like GM received federal aid last month to avert collapse, agreed yesterday to an alliance with Fiat SpA that includes a 35 percent stake for the Italian automaker.

Bloomberg News, Associated Press and The Washington Post contributed to this article.

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