General Motors' 77-year reign ended in 2008 as the American automaker reported a sharp dip in sales. But Japan's Toyota is hardly celebrating its rise to the top, as both carmakers grapple with an industry-wide slump.
AFP - Toyota has dethroned Detroit rival General Motors as the world's top automaker, but there were no celebrations Thursday at the crisis-hit Japanese giant, which is bracing for its first-ever loss.
For many automakers around the world, particularly the US Big Three, the main priority is not to be the biggest, but just to survive a global economic downturn that has sent demand for cars plunging.
Figures from the companies showed Toyota had ended General Motors' 77-year reign as the world's biggest automaker last year, selling 8.97 million vehicles against GM's 8.35 million.
But both makers suffered from weak demand. GM's sales tumbled 11 percent while Toyota saw a four percent drop in global demand -- the Japanese group's first decline in a decade.
"Toyota's rise to the top wasn't really positive because it was achieved not by growth in sales but by a sharper decline in GM's sales," said Mamoru Kato, auto analyst at Tokai Tokyo Research Centre.
"The gap between the sales of Toyota and GM will probably expand for a few years because of growth in the market for environmentally-friendly cars where Toyota has a lead with its hybrids," he said.
"Then, hopefully, a few years later GM will begin to catch up with Toyota, which would be the best scenario for the auto industry. But at this point it's not clear if this scenario will be realised," Kato said.
Investors reacted cautiously to the news, with Toyota shares falling 4.2 percent to 2,855 yen, weighed down by a stronger yen.
Toyota has been careful not to gloat about its success in the United States in recent years for fear of provoking a political backlash, and the company was typically modest about its rise to the top.
"Being number one in terms of size has never really been our goal. Our main objective is to be number one in terms of quality and customer service," Toyota spokesman Paul Nolasco.
Toyota has expanded its global production facilities in recent years to meet brisk demand, particularly for its fuel-efficient cars, leaving it vulnerable to the current slump in worldwide sales.
The company last month forecast a first-ever annual operating loss of 150 billion yen.
"The company continued an aggressive investment over the past several years," said Tatsuya Mizuno, an auto analyst at Fitch Ratings.
"They tried to gain market share from the Detroit Big Three even in large SUV and pickup trucks. But those markets collapsed. Previously, Toyota was more cautious about the future. But they tried too quickly become number one," he said.
Toyota on Tuesday named Akio Toyoda as its new president, turning to the grandson of its founder to rescue the company from its biggest ever crisis.
The 52-year-old family scion is expected to put the brakes on Toyota's rapid expansion and focus more on emerging markets as demand slumps in the United States, Japan and Europe.
But despite all its troubles, Toyota is still in better shape than GM, which will run out of cash if it does not get the second part of a federal bridge loan next month.
GM president Fritz Henderson said the situation was dire for his company, which received a four-billion-dollar emergency loan last month and is due to collect another instalment of the bridge loan in February.
Date created : 2009-01-22