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Future Flick Starring Rick

Rich Kranz
Monday, January 8, 2007

Global dominance, sure -- but on GM's home turf, too?

To some it's unthinkable. But it may be inevitable.

Toyota Motor Sales U.S.A. last year shot past DaimlerChrysler in U.S. sales. In 2007 it is likely to surpass Ford Motor Co. in the United States and General Motors globally. What's next -- Toyota eclipsing GM in the United States?

That would be the final frontier: outselling General Motors on GM's home turf.

Could it really happen?

Well, if Toyota keeps adding U.S. volume and GM keeps losing it at the same pace as in 2006, it could take place before the end of the decade.

Last year Toyota-Lexus-Scion cut the gap between it and GM by 671,274 units.

GM is hovering at just over 4 million sales, and Toyota is now above the 2.5 million mark. That sounds like a lot, but Toyota closed a 1.6 million unit gap with Ford in three years.

The question -- and we don't have the answer: Can Rick Wagoner, Bob Lutz and company fend off the juggernaut from Japan?

Closing in

GM's U.S. unit sales lead over Toyota Motor Sales
2006: 1,522,816
2005: 2,194,090
2004: 2,595,410
2003: 2,848,469
2002: 3,063,890
2001: 3,121,407
2000: 3,296,552
Note: GM's numbers include Saab

A flood of numbers

In a topsy-turvy industry, last week's flood of year-end sales numbers only added to the drama.

Altogether, the Detroit 3 domestic brands lost nearly 800,000 units in sales last year compared with the year before. Their combined share slipped to 53.7 percent, from 56.9 percent the year before. The numbers are no mere abstraction. They equate to about four assembly plants and 1,000 dealerships, based on the average throughput of a U.S. store.

And Toyota continues to pile on the pressure. While GM and Ford are scurrying to close plants, Toyota is expected to announce plans for a new assembly plant this year.

A wider Toyota product portfolio with additions such as the Toyota Prius and FJ Cruiser, the Scion family and especially Lexus won over the hearts and pocketbooks of U.S. buyers during the past decade.

GM won't respond to questions about whether Toyota one day might capture the U.S. sales lead. GM speaks from a global perspective.

"Should the day come where GM is no longer the largest (globally), it will come out fighting the next day," says John McCormick, a GM spokesman. "No one should question our continued resolve to compete head-to-head with any automaker."

Detroit woes

Of course, the bloodbath is not limited to GM. Ford Motor had a 2,584,995-unit lead over Toyota in 2000. But Ford ended 2006 just 358,565 units ahead. DaimlerChrysler was 1,109,103 units ahead of Toyota back in 2000 but was running 151,940 units behind at the end of 2006.

But does that foretell a second-place finish for GM in the near future?

Not likely, says Rebecca Lindland, senior market analyst for market researcher Global Insight. Hindering Toyota Motor's U.S. sales growth is its U.S. production capacity. "In the next five years I see them adding two plants and certainly 10 years out, three or four more plants," she says.

Lindland expects GM's market share of 24.5 percent for 2006 to stabilize at 22 percent in 2010 or 2011. But even with the additional plant capacity, Toyota's market share is unlikely to increase above 18 to 19 percent, up from 15.4 percent in 2006.

"GM would really need to shrink significantly in order for Toyota to surpass that in the next five to 10 years" and zoom past GM, taking U.S. sales leadership, Lindland says.

Toyota continues to play down its sales increases. Asked when Toyota U.S. sales will hit 3 million, Jim Lentz, executive vice president of Toyota Motor Sales U.S.A., said last week during a sales conference call: "We haven't projected out yet."

While Toyota expects "a big increase in Tundra sales, we are not entering a lot of new segments, so our increases will be incremental on a segment-by-segment basis," he said. "We can't expect to see the big 250,000 or 300,000 increases as we have in the past."

You may e-mail Rick Kranz at rkranz@crain.com