GM Could Regain “World’s Largest Automaker” Title in 2011
By Chris Haak
It’s not easy being number one. And, if you listened to GM executives after their company lost the global sales crown in 2008, being the biggest doesn’t matter, but being the best does.
And now, in a curious twist of fate, GM is poised to re-take the global sales crown from Toyota for 2011. GM held that title for three quarters of a century, and Toyota stands to hold it for just three years (2008, 2009, and 2010). So what’s behind this shift?
There are a number of factors at play. GM is building better, more attractive, higher quality cars than it probably ever has, and consumers are noticing them. The company’s marketing, after decades of being pathetic, finally seems to be turning a corner under Joel Ewanick’s leadership. GM’s balance sheet, thanks to bankruptcy, is in its best shape in a half century. And perhaps most importantly, GM has a significant presence in China, which is now the world’s largest car market.
On the flip side, Toyota has a litany of disasters it’s dealing with, some of which were self-inflicted and some of which were provided by Mother Nature. Last year’s recall crisis, though inflamed by irresponsible comments from US officials like Transportation Secretary Ray LaHood, was a wake-up call to the company that reputations that took decades to earn can be pissed away in a very short time. Then, the earthquake and tsunami that hit Japan in early March really threw Toyota for a curve. The company said a few weeks ago that it had lost about 500,000 units of production in Japan due to the effects of the disaster in Japan, and even more alarming, it does not expect to resume normal production until November. That’s eight full months after the earthquake.
Considering GM’s strength in China, and Toyota’s fairly minimal presence there, plus Toyota’s production problems, it’s not hard to predict that the small sales difference between the two companies will be erased in 2011. For 2010, Toyota sold 8.42 million units, while GM was nipping on its heels with 8.39 million. That’s a difference of just 30,000 cars, and even in 2010, GM had the advantage of momentum, with a 12 percent global sales gain against Toyota’s 8 percent gain. GM hasn’t announced its first quarter results yet, but it will be interesting to see if the company reveals any details about its production plans for the remainder of the year, which might give a clue as to its global sales predictions.
So the answer to the question of who will be number one seems to be a foregone conclusion. But could there be a battle for number two between Toyota and Volkswagen? The German giant sold 7.14 million vehicles in 2010 and was planning on a five percent increase for 2011. With that increase, VW’s sales would move to 7.50 million units. Early in 2011, before the earthquake, Toyota was predicting 8.6 million sales for 2011, but conservatively knocking 500,000 sales from that number takes us to 8.1 million. Depending on how much additional production is lost at Toyota, and if VW surpasses its objective of a five percent gain, there could be a battle for number two.
For 2012, this should be an even more interesting race. Toyota production should be fully recovered, Volkswagen will be further growing, and GM will have its North American and Asian operations clicking on all cylinders, and GM Europe may even have some success by then. Could we see a three-way tie?