Toyota Cuts in Front of Ford as No. 2

Japanese giant Toyota Motor Corp. sped past American corporate icon Ford Motor Co. last year to become the world’s second-biggest car company, according to sales figures released Friday.

The ascension marks a major milestone for Toyota, which began as a small weaving factory in 1918, didn’t produce its first vehicle until 1935 and as recently as 1966 sold a mere 20,000 cars and trucks in the crucial U.S. auto market.

Its overtaking of Ford -- a company that gave birth to the auto industry when it created the first mass-production assembly line nearly a century ago -- is a powerful symbol of how even the biggest names in business aren’t safe from bruising competition in the global marketplace.

Toyota’s preliminary figures show that the Tokyo-based automaker’s worldwide retail sales climbed about 10% to 6.78 million in 2003, ousting Ford from the No. 2 spot it held for decades. General Motors Corp., with global sales of more than 8 million cars and pickup trucks, remains firmly in the No. 1 spot it has held for 75 years.

In the eyes of some industry experts, ceding ground to Toyota is a big blow for Ford. Analysts estimate Ford’s worldwide retail sales for last year at about 6.4 million units. “Being second in such an important global industry can be an important marketing tool that it has now lost,” said Bob Schnorbus, chief economist for J.D. Power & Associates.

But the numbers speak as much to Toyota’s rise as they do to Ford’s fall.

Toyota Chairman Hiroshi Okuda has set a lofty goal of capturing 15% of the global auto market by early next decade, up from 10% today. To do so, Toyota must continue to snatch business away from traditional American brands as well as Asian and European rivals.

“Toyota is pursuing world domination and doing it successfully,” said Gordon Wangers, president of AMCI, an automotive market research firm in Marina del Rey.

In the U.S., Toyota now ranks fourth in passenger vehicle sales and is close to overtaking Chrysler Group for the third spot.

Last year, Toyota captured a company record of 11.2% of the U.S. auto market, where it has been the top-selling import brand since 1975. The Toyota Camry sedan was the top-selling passenger car in the U.S. in 2003 -- for the sixth time in seven years -- while the company’s Lexus line was the most popular luxury brand for the fourth consecutive year.

It is because of this rapid growth that Wall Street now pegs Toyota’s total stock value higher than GM, Ford and DaimlerChrysler combined.

Despite all that, Toyota contends it is not engaged in a race with the domestic brands.

“Our focus is on customer satisfaction,” said Xavier Dominicis, a spokesman for Toyota’s import, distribution and marketing arm, Toyota Motor Sales USA, in Torrance. No parties are planned at Toyota’s U.S. headquarters for the official announcement Monday of the global sales figures, he said.

In recent decades, Toyota has expanded into all major auto markets and now sells cars in 160 countries, with manufacturing plants in 27 nations. Toyota’s sales figures include those of its subsidiaries Hino Motors and Daihatsu Motor Co.

All told, Toyota sold 1.87 million cars and pickup trucks in the U.S. in 2003, just under the 2 million units it sold in Japan. But the U.S. auto market -- the world’s largest -- is the most important for Toyota because it accounts for about 70% of the company’s profit.

Ford too has downplayed Toyota’s gains.

Chief Executive William Clay Ford Jr., great-grandson of founder Henry Ford, said his company’s new focus was on regaining profitability, not hanging on to market share. Last year, Ford posted a $495-million profit after racking up $6.4 billion in losses in 2001 and 2002. Ford’s sales figures include its foreign brands Volvo, Land Rover, Jaguar and Aston Martin.

Although Ford’s pickup truck sales, led by the F-150, are strong, the company’s passenger car sales continue to slip. As a result, Ford finished the year with a 19.5% U.S. market share, its lowest since Henry Ford was running the company in 1929.

Ford and GM are now refocusing their efforts on passenger cars, a market that Toyota and Honda have dominated in recent years. Meanwhile, the big European and Japanese automakers -- Toyota among them -- have begun attacking the domestics’ hold on the profitable pickup and SUV markets.

Toyota also has taken a leadership position in the so-called green car market with its innovative Prius sedan and a pair of upcoming SUVs, all powered by a hybrid electric-and-gas engine with dramatically improved fuel economy.

The carmaker’s unlikely start dates to 1933, when Kiichiro Toyoda set up a small auto manufacturing unit in his father’s Toyoda Automatic Loom Works.

Although the family’s name is Toyoda, the company’s was changed to Toyota for simplified pronunciation and because, in Japan, eight is a lucky number and it takes eight strokes of a calligrapher’s pen to write “Toyota” in one popular form of Japanese script.

Until the end of World War II, Toyota Motor Co. primarily built trucks for the Japanese Imperial Army. The firm survived the war with its major manufacturing facilities intact -- Japan surrendered just before a scheduled U.S. bombing raid on the Toyota factory complex -- and began producing civilian cars again in 1947.

From the outset, the postwar company set its sights on global expansion.

In 1957, the firm set up its most ambitious overseas operation, Toyota Motor Sales USA, in an abandoned Rambler dealership in Hollywood. The first car it sold in the U.S. was a pokey, boxy, four-door Toyopet Crown sedan in the summer of 1958.

The early Toyotas sold here handled poorly when driven more than 60 mph and tended to overheat in the mountains and deserts. Toyotas were derided by American automakers as cheap and poorly designed imitations of real cars.

But Toyota’s prices were right. And over time, it improved efficiency at its factories to the point that they became models for modern industry.

“They are the best in the world at auto manufacturing,” said Wangers of AMCI, the research firm. “Their production system is the one all others try to emulate.”

The 1973 OPEC oil crisis gave Toyota and other import brands a big boost because they specialized in fuel-efficient cars at a time when domestic automakers were engaged in a gas-guzzling horsepower war.

By 1990, Toyota was selling 1 million vehicles annually in the United States. Then in 1999, Toyota shocked Detroit when it launched the first Japanese-made large pickup truck, the Tundra, and immediately bested Ford and GM trucks in various quality and buyer satisfaction awards.

Toyota also has made enormous investments in manufacturing and distribution facilities in the U.S., Wangers pointed out, with eight factories in the U.S. and a ninth under construction. It employs about 35,000 employees here.

As a result, Toyota is “more politically comfortable about challenging the domestics,” Wangers said. “There’s a good chance that in my lifetime -- and I’m 46 -- they’ll surpass GM in global sales too.”

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Toyota timeline

1933: Toyoda Automatic Loom Works, a Japanese manufacturer of weaving machinery, starts an automobile manufacturing division.

1937: Spins off the unit as Toyota Motor Co.

1947: After World War II, begins producing cars again.

1950s: The company introduces a just-in-time delivery system.

1957: Opens its first sales office in the United States.

1958: Sells its first car in the U.S., a four-door sedan called the Toyopet Crown.

1959: Toyota opens a plant in Brazil, its first plant outside of Japan.

1968: The economy-size Corolla debuts in the U.S.

1973: A surge in gas prices during the OPEC oil crisis boosts the popularity of Japanese economy cars.

1975: Toyota surpasses Volkswagen to become the bestselling foreign import brand in the U.S.

1983: The Camry is launched.

1984: Opens its first U.S. assembly plant in Fremont, Calif., a joint venture with General Motors Corp.

1989: Opens its first wholly owned major American plant, in Georgetown, Ky. Introduces the Lexus luxury line.

2000: The gasoline-electric hybrid Prius sedan is introduced in the U.S.

2002: Toyota produces its

10 millionth vehicle in North America.

2003: Toyota becomes the world’s second-biggest automaker, with 6.78 million vehicles sold.

Sources: Toyota Motor Corp., International Directory of Company Histories,

Times research

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Ford timeline

1903: Henry Ford starts Ford Motor Co. in Dearborn, Mich.

1908: Ford introduces the affordable Model T to U.S. drivers.

1922: The company acquires Lincoln Motor Co.

1927: General Motors surpasses Ford’s annual sales for the first time.

1938: Ford launches the Mercury line.

1945: Henry Ford II takes over the company after his father’s death.

1955: Ford introduces the popular Thunderbird.

1958: Produces the Edsel, which becomes one of the auto industry’s most notorious flops.

1964: Introduces the Mustang, which in months becomes one of America’s most popular cars.

1970s: Despite strong growth in its European subsidiaries, Ford and other domestic automakers’ sales drop as U.S. consumers seek out more economically sized imports.

1980: Loses $1.54 billion after having to meet new clean-air standards for its vehicles.

1985: Introduces the Ford Taurus.

1989: Buys British carmaker Jaguar.

1999: Purchases Volvo’s car manufacturing division.

Chief Executive Jacques Nasser announces he wants to move Ford from being an automaker to a major consumer services company that also makes cars.

2000: Buys Land Rover.

2001: Nasser is ousted. Henry Ford’s great-grandson, William Clay Ford Jr., takes over as chairman and CEO.

Ford sales plummet, and the company loses $5.45 billion.

2003: Ford sells an estimated 6.4 million vehicles.

Sources: Ford Motor Co., International Directory of Company Histories,

Global Insight, Times Research