GM is back in high gear
After 76 years, General Motors Corp. has all but lost its exclusive lock on the title of world’s leading carmaker, ending 2007 in a virtual tie with Toyota Motor Corp., according to results released Wednesday that showed only a 3,700-vehicle gap between them. So why is everyone at GM’s Detroit headquarters so happy?
Because hidden in the news that the rivals each sold 9.37 million vehicles last year was the fact that only once before has GM moved so much metal -- in 1978, when it sold 9.55 million cars and trucks. The big difference between then and now: Explosive growth in the developing world promises to push sales significantly higher.
At the same time, Toyota is grabbing U.S. market share, passing Ford as the No. 2-selling carmaker last year and taking a significant bite out of GM’s home-field advantage. A strange new automotive world order is developing that could make GM the most international of all brands, and Toyota a contender for the U.S. crown.
“The dynamics of the game are changing,” said Dennis Virag, president of Automotive Consulting Group Inc. “GM is really focusing growth efforts on other areas of the world. Toyota will continue to gain strength in the U.S. market.”
It’s a far cry from the world GM dominated 30 years ago, when the vast majority of car sales came in North America. In 2007, the U.S. market, at just over 16 million vehicles, represented less than a quarter of the nearly 71 million vehicles sold worldwide. GM’s U.S. sales slid to 3.8 million vehicles in 2007, compared with 7.1 million in record-setting 1978.
Instead, GM has found growth in markets such as Russia, where it increased sales by 95% last year. It’s looking to China, whose market is still half the size of the U.S. but moves more Buicks than anywhere in the world. And it’s making headway in Latin America, Africa and the Middle East, where it sold a record 1.23 million vehicles last year.
“The growth is not in North America. The growth is not in Western Europe,” said Michael C. DiGiovanni, GM’s head of global market and industry analysis. “You have to excel in every region, but you have to look at your overall global game plan.”
For Toyota, which faces a stagnant market in Japan, a major part of the global game plan is, increasingly, the U.S. The company’s market share here has grown to 16.2% and sales in 2007 were up by 700,000 compared with 2003.
Its Camry is the top-selling sedan by far, but Toyota has been beefing up sales in segments such as trucks. The company sold nearly 200,000 full-size Tundra pickups last year, a 58% increase over 2006.
“It’s easy to forget that this is not Toyota’s home market,” said Rebecca Lindland, director of automobile research at Global Insight.
Still, she says, it’s important to remember that GM isn’t giving up on the U.S. market; rather, it’s working to reduce production to meet demand, eliminating costly inventory problems and introducing cars it hopes Americans will buy, such as the redesigned Malibu.
As for Toyota, it’s hardly giving up on the rest of the world. “There are growth opportunities in China, Europe and Asia that are open to us,” said spokesman Steven Curtis.
With competition for developing markets building, Toyota recently said it was exploring producing inexpensive cars for countries such as China and India, where one company, Tata, recently unveiled a $2,500 car.
Analysts say the demands of the world’s growing marketplace probably mean that no other car companies will catch up with the two giants. Ford, Nissan/Renault, Honda, Volkswagen and others may have to content themselves with the battle for a distant third place, analyst Virag said.
“Everyone else is miles behind,” he said.
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