General Motors might consider using Mark Twain’s famous line “rumours of my demise are greatly exaggerated” as its new strapline. Amid well-publicised financial problems, the once-mighty company is about to be overtaken by Toyota as the world’s biggest car maker.
Toyota is expected to announce in a new business plan next month that it aims to make 9.2 million vehicles in the year to March 2007, a figure that should see it surpass GM as the US car maker is forced to cut production further. Toyota, which had unseated Ford as the world’s second-largest manufacturer, is worth $160bn (&£90.4bn), compared with GM’s $16bn (&£9bn).
GM lost $3.8bn (&£2.1bn) in the first nine months of this year due to its declining US market share. Chief executive Rick Wagoner admitted that the group could be forced to cut production and shift to smaller, more fuel-efficient cars in response to soaring petrol prices.
Mike Moran, former commercial director of Toyota GB, says GM’s problems are more rooted in the US than Europe. “It didn’t take enough care over its US brand or product development,” he says. “It hasn’t done anything extraordinarily badly, and had a bit of a renaissance in Europe, but Toyota has been unstoppable. The quality of its vehicles is very high, and its customers are very loyal.”
This year, GM reported its best September sales in Europe since 1999. But US sales fell by 24 per cent and last month a Wall Street analyst warned that the company has a 30 per cent chance of filing for bankruptcy. GM remains bullish, however: “Nobody is in denial,” says vice-president of communications Tony Cervone. “We are focusing on the issues. Toyota is a formidable competitor, but I defy anyone to find a company that has been number one in any industry for 75 years. We’re going to compete for every tenth of a point of market share and, if it is Toyota we’re competing against, bring it on.”
Toyota, which is already the most profitable car maker in the world, having reported a net profit of more than $10bn (&£5.66bn) in the year to March 2005, has been the pioneer in the hybrid market. The company said last month that it was selling the Prius faster than it could be built. UK sales of the model, which runs on a combination of petrol and electricity, have increased from 1,588 in 2004 to 3,057 so far this year.
Toyota GB commercial director Paul Philpott says: “We’re well ahead in terms of hybrids and they will bring a lot of growth. The fundamental point is that we make superior cars that don’t break down. We have an evolutionary growth plan, but we’re not saying we want to be number one by a certain date. We will continue to grow based on consumer demand for our products and it is likely, therefore, that we’ll overtake GM, which has declining sales.”
GM, which owns the Vauxhall brand in the UK and Opel in Europe, rebranded Daewoo as Chevrolet earlier this year, and sales of the iconic American marque have been encouraging. But the company’s deep-rooted problems remain and, while aping Twain might seem like the perfect riposte, GM is preparing to pull on the gloves to fight off Toyota’s threat.