Toyota ends GM's reign as car sales leader

By Martin Zimmerman

April 25, 2007 12 AM PT

Times Staff Writer

Since the Great Depression, General Motors Corp. has been the world’s largest automaker, a symbol of American economic power.

But on Tuesday the Detroit company lost its crown to Toyota Motor Corp. of Japan, which has been relentlessly chipping away at GM’s global dominance. And now, as Toyota pulls into the passing lane, GM will only appear smaller in its rearview mirror.

“I’ve been in this business for 37 years, and what I’m seeing now is the continuation of a trend that I’ve observed for 37 years,” said Jim Hossack, a consultant with AutoPacific Inc. in Tustin. “Toyota is getting stronger and stronger, and the Detroit Three are getting weaker and weaker.”

Barring a merger of major auto-producing rivals, it’s unlikely that Toyota’s leadership position will be seriously challenged anytime soon. Years of missteps by the U.S.-based automakers have allowed Toyota to grab the lead by efficiently producing high-quality cars that are a hit with motorists.

“I don’t see that there’s any other company that will be able to exceed Toyota in terms of scale in the near future,” said Marvin Lieberman, professor of policy at UCLA’s Anderson School of Management.

The Japanese automaker said Tuesday that it sold 2.35 million vehicles worldwide during the first three months of the year. That topped the 2.26 million cars and light trucks sold by General Motors.

Toyota has been gaining on its U.S. rivals for several decades as motorists sought out cars that were better built, had higher resale values and, increasingly, got better gas mileage.

The event wasn’t marked by celebrations at the automaker’s global headquarters in Toyota City near Nagoya, Japan, or at its numerous U.S. assembly plants and sales and design offices. The key worldwide sales number wasn’t even included in the company’s announcement of its first-quarter vehicle production.

“It’s only a quarter,” deadpanned Mark Templin, vice president of Toyota USA’s Scion division in Torrance. “It’s just really not our focus. We never talk about it.”

Toyota sold its first car in the U.S. in 1957, introducing a boxy, pokey four-door called the Toyopet Crown to skepticism, if not outright derision. Fifty years later, the company is wary of appearing too successful, fearing a possible backlash in the U.S. as it grabs buyers from GM, Ford Motor Co. and Chrysler Group.

Although Toyota still ranks third in U.S. sales, its share of the American market has jumped to 15.6% from 7.3% since 1995. GM’s domestic market share has fallen from almost 33% to 23% during that period.

Perhaps recalling the resentment spawned during the 1980s by the surge in Japanese imports, recent Toyota ad campaigns have focused on the automaker’s growing U.S. manufacturing presence.

The company may build as many as five new North American assembly plants by 2016 and broke ground just last week on a $1.3-billion factory in Mississippi that will produce 150,000 Highlander SUVs annually. That would bring its total in North America to 13 plants and add 10,000 jobs to its current total of about 40,000 in the region.

Even so, almost half of the 2.5 million vehicles Toyota sold in the U.S. last year were imported from overseas factories.

“There’s always talk of a potential backlash, but I haven’t seen any signs of it at all,” said Jesse Toprak, senior analyst with Edmunds.com. “There will always be certain pockets in the U.S. that are less likely to buy a Japanese import. But they generate so much volume in the rest of the country that it’s not a major concern.”

In Los Angeles, the leading market for Toyota’s gas-sipping hybrid cars, the automaker accounted for 28% of all new-vehicle sales last year, up from 21% in 2002, according to market research firm R.L. Polk & Co. GM’s market share in L.A. has slipped below 14%.

On Tuesday afternoon, Hector Rodriguez, 51, was checking out a new Prius at Miller Toyota in Culver City. A self-proclaimed GM fan who recently bought his daughter a 2001 Yukon, Rodriguez was nonetheless shopping for relief from high gas prices.

“American cars take mucho gasoline. It’s too much,” he said.

Toyota’s growth in North America comes as payrolls at the Detroit Three shrink. The U.S. automakers are saddled with billions more in healthcare costs for workers and retirees than their Asian rivals.

Toyota’s ascendance comes even as GM, which had reigned atop the global auto pyramid since snatching the crown from Henry Ford in 1931, appears to be pulling back from the financial brink.

A year ago, the U.S. corporate icon was in such sad shape that investor Kirk Kerkorian was trying to force it into an alliance with auto companies from Japan and France.

But a restructuring of its North American operations that will slash 34,000 jobs, shutter 12 plants and cut $9 billion in structural costs has helped GM get a second wind. The automaker, which lost $10.6 billion in 2005, managed to turn a profit in the fourth quarter of last year and is expected to report another profit when it releases it first-quarter results May 3.

GM’s first-quarter worldwide vehicle sales, though second to Toyota’s, were a personal best for the American automaker, boosted by double-digit sales gains in Asia and Latin America. A good chunk of the falloff in U.S. market share, meanwhile, has been because of the company’s conscious decision to drastically reduce low-profit sales to rental companies and corporate fleets.

Toyota’s growth hasn’t come without growing pains. The company’s reputation for quality has been dinged by a series of vehicle recalls, including one of 320,000 Prius hybrids last year to fix a potentially faulty steering component.

The automaker’s rapid U.S. expansion also is taking a toll on its workforce, according to recent news reports. Toyota plans to restructure its North American operations in an attempt to lower the strain on its engineers and production managers and reduce turnover.

“Being No. 1 is not all ease and comfort,” said David Cole, director of the Center for Automotive Research in Ann Arbor, Mich. “There are issues that make it very, very tough.”

martin.zimmerman@latimes .com

Times staff writers Ronald D. White and John O’Dell contributed to this report.

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Auto industry giants

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