Bloomberg News

Toyota Beats GM in 2013 as 10 Million Vehicles Seen

January 24, 2014

Toyota's Motomachi Plant In Toyota City

A Toyota Motor Corp. worker makes a final inspection of the company's Crown sedan at its Motomachi plant in Toyota City. Photographer: Tomohiro Ohsumi/Bloomberg

Toyota Motor Corp. (7203) set a target of selling an unprecedented 10 million vehicles in 2014 after leading General Motors Co. (GM:US) and Volkswagen AG (VOW) in global auto deliveries for a second straight year.

Worldwide vehicle sales at Toyota, including deliveries from subsidiaries Hino Motors Ltd. (7205) and Daihatsu Motor Co. (7262), rose 2.4 percent to 9.98 million units last year, the Toyota City, Japan-based automaker said in a statement yesterday. That compared with the 9.71 million units sold by GM and over 9.7 million units at VW. Sales will probably rise to 10.32 million units this year, Toyota said.

Toyota Chief Executive Officer Akio Toyoda retained the No. 1 ranking while piling up profits, outearning GM and VW combined in the most recent quarter. Still, he faces resurgent American automakers fielding their best cars in decades and an aggressive Volkswagen that’s increasing investments in the U.S. and China.

“The competition is getting more intense,” said Sanjeev Varma, the managing director at Stellar Alliance Group LLC, who is based in Detroit. “VW is number one in China, GM number one in the U.S., and all three automakers are scaling up investment in product development and on new models.”

Toyota’s shares fell 1.4 percent to 6,170 yen at the close of Tokyo trading. The stock gained more than 60 percent last year, outperforming the benchmark Nikkei 225 Stock Average.

Turning Point

Last year marked a turning point for Toyoda, who took over as president after Toyota’s first annual loss in almost six decades. After years of being haunted by global recalls, natural disasters, a soaring yen and Chinese boycott against Japanese products, Toyoda got what he wished for: a disaster-free year.

The Toyota scion cleared out the remnants of top management inherited when he took the helm in 2009, laid out a more clearly defined corporate structure with a greater focus on emerging markets, and appointed three outside directors to join the board for the first time.

Toyoda, grandson of the company’s founder, is also pushing an overhaul of vehicles with an emphasis on “waku-doki” design, shorthand for the Japanese phrase for heart-racing qualities.

“What Toyoda has been doing is to go back to Toyota’s original philosophy and focus on products and long-term goals,” said Kota Yuzawa, an analyst at Goldman Sachs Group Inc. in Tokyo. “Last year was the first year his efforts began to bear fruits. The product cycle has just started and they can probably continue to roll out good products and give us good numbers.”

Narrowing Gap

The competition is heating up. While Toyota led GM by about 460,000 units in 2012, this year, the gap has narrowed to about 270,000 units.

Long saddled by uncompetitive labor costs, GM emerged under the leadership of Dan Akerson from near-collapse a half-decade ago. The former telecommunications executive with no previous auto experience took the company from the wake of its bailout and bankruptcy to profitability and independence, handing off the leadership reins this month to Mary Barra, the first female CEO in the industry.

GM said it will bring out at least 14 new or updated vehicles in the U.S. this year -- after 18 models last year -- as the company transforms its lineup into one of the freshest in the industry from one of the oldest. The Chevrolet brand won the North American Car and Truck of the Year awards at the Detroit auto show with its Corvette Stingray sports car and Silverado pickup, the first time GM has taken both prizes since 2007.

GM Deliveries

Last year, GM deliveries increased 4 percent to 9.71 million units. VW’s global sales, which includes the heavy truck brands of MAN and Scania, rose almost 5 percent to more than 9.7 million units, the company said in a statement earlier this month, without giving an exact figure.

To catch up with Toyota and GM, VW announced plans at the Detroit auto show this month to spend more than $7 billion during the next five years in North America. VW seeks to boost sales of its namesake and Audi brands to 1 million vehicles by 2018, the year it has set as a goal to become the best-selling automaker in the world.

The carmakers are competing for supremacy in a U.S. auto industry that reported its best year since 2007, with deliveries increasing 7.6 percent to 15.6 million. Detroit’s car companies ended 2013 in a position that would have seemed unfathomable just five years ago, when GM and Chrysler headed toward government-backed bankruptcies and Ford struggled to restructure itself amid the longest recession since the Great Depression.

U.S. Supremacy

U.S. sales of Toyota, Lexus and Scion models rose 7.4 percent last year to 2.24 million, the most since its 2007 record year in its largest market. The Camry sedan fended off competition from Honda Motor Co. (7267)’s Accord, Nissan Motor Co. (7201)’s Altima and Ford Motor Co (F:US)’s Fusion sedan to remain the top-selling U.S. car for a 12th consecutive year, as the weaker yen gave Toyota room to offer higher incentives for the model.

In China last year, as GM lost its top spot to VW for the first time in nine years, Ford Motor Co. overtook Toyota despite a record year for the Japanese carmaker, which boosted deliveries 9.2 percent to 917,500 units. Demand recovered as consumers returned to showrooms with the fading of tensions triggered a year earlier by a territorial dispute between Asia’s two largest economies.

China Demand

Toyota is expecting sales to reach 1.1 million units in China this year, counting on the new Vios and Yaris sedans tailored for Chinese consumers to drive demand. Industrywide sales are projected to expand by as much as 10 percent this year, after the country became the first to surpass 20 million units in annual deliveries, according to the China Association of Automobile Manufacturers.

A December visit by Prime Minister Shinzo Abe to Tokyo’s Yasukuni Shrine, which honors the war dead including 14 World War II leaders convicted as Class-A war criminals, illustrates the vulnerability that Japanese carmakers face in recurring bouts of political tensions between Asia’s two biggest economies.

In 2012, consumers shunned Japanese products over the islands dispute, sending Toyota sales down by 4.9 percent, its first annual decline on record in the country.

At home in Japan, Toyota’s sales declined by 5 percent to 2.295 million units in 2013, as Abenomics helped improve consumer sentiment in the second half after the withdrawal of government subsidies weighed on deliveries earlier in the year.

Japan Slump

Deliveries may decline 5 percent to 2.18 million vehicles this year, according to the statement, as a proposed three-percentage point increase in sales tax in April by Abe’s government damps demand.

Southeast Asia emerged as the main drag on Toyota last year. Deliveries fell 14 percent in Thailand in 2013 and may decline 10 percent this year, as government rebates to encourage first-time vehicle buyers ended and economy slowed amid political instability, according to Kyoichi Tanada, Toyota’s Thailand chief.

In Indonesia, where Toyota and unit Daihatsu account for about half of sales, the growth in industrywide deliveries has slowed to below 10 percent for three straight quarters amid higher fuel prices, according to data compiled by Bloomberg.

“Competition is definitely much tougher than before the financial crisis,’ said Peggy Furusaka, an autos analyst at Moody’s Corp. in Tokyo. ‘‘It’s going to be more and more difficult to predict who’s going to be No. 1.”

To contact the reporters on this story: Ma Jie in Tokyo at jma124@bloomberg.net; Masatsugu Horie in Osaka at mhorie3@bloomberg.net

To contact the editor responsible for this story: Chua Kong Ho at kchua6@bloomberg.net


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