Toyota is the World’s Top-Selling Automaker Through the First Half of 2009
By Chris Haak
For the period between January 1 and June 30, 2009, Toyota Motor Corp. continued its sales dominance over the global automotive industry. However, relative to its first-quarter pace, the rest of the industry has begun to catch up.
Toyota reported today that it sold 3.56 million vehicles in the first half of 2009, while GM sold nearly as many – 3.55 million – during the same period. During the second quarter of 2009 – from April 1 through June 30 – Toyota sold 1.80 million vehicles while GM sold 1.94 million. Toyota’s units include its Daihatsu and Hino subsidiaries.
Meanwhile, Volkswagen – which has aspirations to itself become the world’s largest automaker over the next several years that I’ve previously scoffed at – managed to sell a strong 3.1 million vehicles in the first half of the year. Helping VW is minimal exposure to the US market (while Toyota and GM are obviously heavily exposed to the US), so the company’s 16.4% US sales decline through June 30 in the US (including Audi) is not only better than the overall US market’s 35.1% decline, but also only costing the company a loss of 26,665 sales against the same period in 2008. Meanwhile, Toyota sold 469,640 fewer units in the US during the first half of 2009, while GM sold 641,717 fewer vehicles. Instead, VW has been able to capitalize on Germany’s scrappage plan in favor of small cars, and incentives in China designed to spur sales of fuel-efficient new vehicles. GM’s China sales were also a bright spot for the shrinking giant.
Toyota has a dramatic overcapacity problem today, and really, the only way to eliminate the high fixed costs of too many assembly plants is to close some of them. This, however, goes against Toyota’s tradition of never having done so in its history. One of the first on the chopping block is likely the NUMMI plant in Fremont, California. NUMMI had been a joint venture with GM for the past 25 years, but with GM’s closure of the Pontiac brand and the cancellation of the Pontiac Vibe built at the plant, the plant’s future is sketchy at best. NUMMI had built the soon-to-be-discontinued Pontiac Vibe, Toyota Corolla, and Toyota Tacoma.
With the Vibe’s departure – and Toyota’s nearly-complete plant in Mississippi still without a product assignment – Toyota not only has a convenient excuse for extricating itself from NUMMI (it can easily build the Corollas at a factory in Canada and the Tacomas at a factory in Mexico), but another relatively low-hanging fruit in Mississippi that would potentially require no layoffs. It’s also somewhat convenient for Toyota that NUMMI is its only plant where the workers are represented by the UAW – and their contract is nearly up. Closing NUMMI would not only solve some of the US overcapacity problem, but also remove the obstacle of dealing with the UAW at the plant. The downside, of course, is the loss of more than 400 additional automotive jobs in an industry already reeling from thousands of job losses (budget-crunched California doesn’t need 400 more unemployed people, either).
Toyota’s new chief Akio Toyoda, the grandson of the company’s founder, has said that he is prepared to make tough choices as the company fights for market share and profits along with every other player in the industry. Without keeping a lid on costs as sales dwindle, Toyota is at risk of drawing its cash reserves lower than it would like. As recently as March 31, the company was down to ¥3.3 trillion ($35 billion USD) in cash reserves, but that is down from ¥4.2 trillion ($44 billion USD) on March 31, 2008. Toyota took steps in June to boost its liquidity position by issuing new bonds, but it can’t continue doing that forever. Just ask GM.
Stay tuned to see how the numerous story lines here will play out – Toyota’s overproduction, the fate of NUMMI, the global sales race, and more. It’s a time of immense change in the auto industry, and I don’t think anyone knows how things will shake out by December 31.
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