OSAKA - Japanese and American car
manufacturers for decades have competed
vigorously, sometimes to the point of animosity.
Now, with its recent purchase of 8.7% of Fuji
Heavy Industries Ltd - for about US$315 million -
Toyota is poised within the next few years to
overtake GM as the world's number one automaker.
"It is perhaps one of the last stepping
stones for Toyota ... In terms of sales, the way
it looks, they [Toyota] are going to surpass GM,"
said economist Noriko Hama of Doshisha University
School of Management.
According to data
from the Power Information Network, Toyota
overtook General
Motors (GM) in US retail market share in early
October. Amid high gas prices and an end to
employee discounts, early October sales at GM were
down 57% compared with the same period last year.
Experts predict Toyota's sales soon will
permanently exceed those of GM. "Toyota will
overtake GM in the near future," said Nakagawa
Ryu, an economist at Kansai University. "It has
already surpassed GM in terms of profits. Toyota's
sales are still behind GM, but growing quickly."
Reflecting an upward trend, Toyota's overall sales
for 2004 were 6.7 million, up 9.9% from 6.1
million the previous year. In 2002, the company
sold 5.5 million vehicles. While GM's sales were
up to 8.2 million this year over last year's 8.09
million, its sales have declined since 2002, when
its total was 8.4 million.
Toyota's North
American sales passed the 2 million mark for the
first time last year at 2.1 million vehicles,
whereas GM sales dropped to 5.46 million from 5.6
million in 2003. Toyota, which also has stakes in
Japanese carmaker Daihatsu and truckmaker Hino,
reported profits for 2004 of more than $10
billion, dwarfing GM's, which stood at $3.7
billion.
Meanwhile, Toyota's Fuji Heavy
Industries deal also had an impact on GM, which is
currently cash-strapped and has had a stake in
Fuji Heavy since 1999. GM's North American
operations have lost $2.5 billion in the first two
quarters. As part of the Toyota deal, GM will sell
its entire 20.1% stake in Fuji Heavy Industries,
valued at about $740 million. Toyota, which is
Japan's top car producer, limited its purchase to
8.7% to avoid running into difficulties with
Japan's anti-monopoly regulators.
Still,
purchasing the GM stake will make Toyota the
number one shareholder in Fuji Heavy, owner of
Subaru vehicles, and will give the firm
much-needed access to Fuji's underused US plants,
helping Toyota keep up with swelling demand. Fuji
Heavy's 2004 net income was $365.9 million.
The move could also have less obvious
advantages. "Toyota could be killing two birds
with one stone," Hama said. "Now GM owes Toyota
one, and GM would not be likely to grumble about
Toyota's share in the international market."
Hobbled by three consecutive quarters of
losses, GM will only be getting back about half
the amount it paid five years ago when it
purchased its Fuji stake. But the sale should
generate cash at a time when the troubled Detroit
auto giant is pondering a multi-billion-dollar
bailout of Delphi, its biggest parts supplier.
This month, Delphi chief executive officer
Robert S Miller said GM was in danger of
eventually falling into bankruptcy if it did not
lower its enormous labor costs. Meanwhile, rating
agencies are taking an increasingly pessimistic
view of its prospects, with Standard & Poor's
rating its debt at high-yield or "junk" status.
Experts say GM's earlier success has been
a factor in its decline. Resting contentedly at
the top, it has been slow to adjust to changes in
world demography, and "has been slow to recognize
the impact of globalization", Hama said.
Japanese media have speculated that the
Fuji sale was in part undertaken to help GM, but
Toyota denied this.
"The aim of the
business alliance between Toyota Motor Corporation
and Fuji Heavy Industries is not to support GM,"
Hidehiko Fujii of the Japan Research Institute
said
Friction between US and Japanese
automakers became an issue at the end of the
1970s, reaching boiling point in the 1980s when
Japanese cars started flooding US markets in a
cut-throat business environment of what US media
termed "torrential exports".
Reluctant to
re-ignite past conflicts, Toyota has in recent
years taken pains to develop alliances. The firm
has made statements indicating that there is a
time and place for competition, but that it would
cooperate when appropriate. "It is not their
intention to ruffle US feathers," Hama said.
Toyota's success can be partly attributed
to its cookie cutter management style. "Toyota has
transplanted its management style wherever it
went, whereas competitors like GM allowed the
local plants to go their own way," Hama said of
Toyota's kanban or just-in time system of
inventory, now a global standard in the auto
industry.
Historically, Toyota and other
Japanese carmakers have tuned this island nation's
lack of natural resources into an advantage.
"Japan has very few natural resources, so Japanese
companies have always thought about saving
energy," Nakagawa said. "That is a big difference
between the US and Japan."
Hybrid
success And at a time when the world's
attainable oil supply is running low, Toyota is
unrivaled in the development of fuel-efficient
hybrid models, which combine gas and electric
power. The company has boasted the sale of a
record 106,978 hybrids in the US so far this year,
a number exceeding the 2004 combined total for all
auto manufacturers, such as DaimlerChrysler, Ford,
Honda and Hyundai.
The company aims to
start selling a million hybrid electric cars a
year by early next decade. Boosting demand for
hybrids are a myriad of factors, including tighter
government restrictions on emissions and rising
fuel prices.
Furthering its advantage in
hybrids, the Fuji stake will give Toyota access to
Fuji's advanced battery technology. Fuji is
developing hybrid batteries that it says are
longer lasting and better equipped to handle
extreme temperatures than the ones in current use.
Toyota also recently increased its stake from 40
to 60% in Panasonic EV Energy, a battery supplier
for hybrids.
Amid global concern over high
fuel costs, experts say companies such as Toyota
will emerge unscathed. "The current oil crisis
will not severely affect Japan because, for
decades, Japanese car companies have taken
measures to prevent a repeat of 1974," Nakagawa
said, referring to the 1974 crisis that rocked the
industrialized world.
Conversely, American
automakers such as GM have been hit hard, affected
by high fuel prices and a lack of demand for
gas-guzzling SUVs.
"Toyota will remain
strong," Nakagawa said. But as for GM, a company
that has been struggling for some time now, his
outlook is dubious.
Matthew
Rusling is a freelance writer in Osaka. He can
be reached at mjrjapan@yahoo.com
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