GM loses global lead to Toyota

From wire reports

July 24, 2008

DETROIT - General Motors Corp., pummeled by falling U.S. sales and high gas prices, lost the global sales lead to Toyota Motor Corp. in the first half of this year, but the churning market makes it difficult to predict which automaker will end the year on top.

Toyota sold 4,817,941 vehicles globally during the first six months of the year, company spokesman Hideaki Homma said yesterday, beating GM by 277,532 vehicles. Toyota said its global sales rose 2 percent from the same period the year before, while GM's sales fell 3 percent.

It's the second time Toyota has beaten GM in sales in the first half of the year. Last year, Toyota outsold GM by about 50,000 vehicles, although GM eked out a win for the full year, retaining its 77-year position as the world's largest automaker by sales.

Toyota didn't release regional sales totals, but the weakened U.S. market appeared to be the biggest battleground. With its reputation for small, fuel-efficient cars and less exposure to the plummeting truck and SUV market, Toyota's U.S. sales fell 6 percent, compared with a 16 percent drop for GM. Industrywide sales fell 10 percent.

"The sales difficulties in the U.S. are going to continue; the price of fuel is just so high," said John Wolkonowicz, an analyst with Global Insight Inc. in Lexington, Mass. "That's really the story for GM and Toyota: How bad was North America?"

Outside North America, GM's sales grew 10 percent. The automaker reported exploding sales in emerging markets like Russia, where sales were up 34 percent in the second quarter, and China, where sales rose 14 percent. GM said that despite the tough sales environment in mature markets like the U.S. and Japan, it predicts industrywide global sales will rise 2.5 percent this year to a new record of 72 million vehicles.

"The growth momentum in emerging markets is still strong," said Mike DiGiovanni, GM's executive director of global market and industry analysis.

Investors shared that optimism, pushing GM shares up 14 percent before they tapered off later in the day. GM shares gained 30 cents, or 2.1 percent, to finish at $14.62 yesterday.

Still, GM said its gains elsewhere have yet to make up for its losses in North America, where sales fell 20 percent in the second quarter. The automaker blamed high gas prices, which have caused a steep decline in U.S. truck and SUV sales, as well as a nearly three-month strike at American Axle and Manufacturing Holdings Inc. that shut down much of GM's production.

Toyota hasn't been immune to those troubles. Toyota's profit for the January-March quarter sank 28 percent from the previous year as a strengthening yen and lagging North American sales chipped away at the Japanese automaker's earnings. The company also said it expects sales to drop for the first time in nine years for the fiscal year that ends in March 2009.

Toyota's U.S. sales also took a surprising 21 percent dive in June, prompting the company to make major manufacturing changes at its U.S. plants.

The Associated Press and Bloomberg News contributed to this article.