Toyota expected to beat GM in '07

TOKYO — TOKYO -- Toyota Motor Co. said yesterday that it planned to sell 9.34 million vehicles next year, a figure that analysts said would put it ahead of troubled General Motors Corp. as the world's largest auto company.

Toyota reported global group sales this year of 8.8 million cars and trucks, below GM's 2006 sales forecast of 9.2 million vehicles.


But figures released yesterday show the rival car giants on starkly different trajectories, with Toyota expecting to add a half-million vehicle sales next year, at a time when GM is closing plants and laying off workers.

Surpassing GM would be a crowning achievement for Toyota, a company that got its start in the 1930s by reverse-engineering GM and Ford cars and that spent decades catching up with Detroit. It would also end GM's 81-year reign over the global auto industry, and mark another step in the rise of Asian carmakers.


However, becoming the global leader would also have its pitfalls for Toyota. Analysts warned that the Japanese automaker could become a victim of its own success and follow GM's decline if it grows complacent, or lets quality control slip amid its rapid expansion.

Being at the top also could make Toyota a fatter target for critics, particularly in Congress, where the company's rise could fan a protectionist backlash, analysts said. "Does being No. 1 matter? It matters for GM, and for America," said Hirofumi Yokoi, an analyst in the Tokyo office of auto consultant CSM Worldwide. "It becomes a political issue when America gets passed in a core industry. Toyota will have to be even more sensitive and cautious in the U.S. market."

Toyota's emergence as No. 1 would also realign the global auto industry. The Japanese car company would become the new industry benchmark, say analysts, and one that would be tough to match.

While GM's strength in recent years has been its finance arm, Toyota's success is grounded in its formidable manufacturing prowess. As the world's most profitable carmaker, it also has the cash to invest heavily in new technologies and products, analysts said.

Analysts also said reaching the top would not exhaust Toyota's opportunities for growth. They said Toyota will continue to gain in the American market, where higher gas prices have increased the popularity of smaller, more fuel-efficient vehicles. They said Toyota was expanding in developing markets, particularly China, and into alternative-energy vehicles, such as hybrid and fuel-cell technologies.

The Associated Press reported that Toyota President Katsuaki Watanabe addressed yesterday Toyota's recalls this year, which have tarnished its reputation for sterling quality.

"There will be no growth without quality," Watanabe said. "We'd like to continue our efforts to make good products that win support from our customers."

Analysts say the growing number of defects could seriously undermine Toyota in the long run, especially if they are a symptom that it is losing its grip on quality control as it charges forward with expansion.


"Now that it's Toyota's turn on top of the industry," said CSM's Yokoi, "Toyota has to figure out how to keep from following GM into decline."

So far, the recalls have not slowed Toyota's pace of growth. The company said yesterday that it and its affiliates expected to build 9.42 million cars and trucks next year, up from 9.04 million this year.

Toyota also said its largest market would remain the United States, where sales are expected to rise 6 percent to 2.68 million vehicles next year.

The company said it expected a 9 percent rise in Europe and a 15 percent gain in Asian markets, including China.