Toyota Targets GM With New Models

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The New York Sun

Toyota Motor Corporation, Japan’s largest automaker, is coming to Detroit this week with four new models aimed at helping it end General Motors Corporation’s 80-year reign as the world’s no. 1 seller of cars and trucks.


Toyota is using the North American International Auto Show in Detroit to introduce vehicles including a “reimagined” Avalon sedan targeted at people who might otherwise buy General Motors’ new Buick Lucerne.


After selling more vehicles than Ford Motor Company in 2003, Toyota is adding plants, raising sales in North America and Europe and targeting a 15% market share worldwide by the end of the decade. General Motors, with 14.5% now, is closing American factories and cutting production capacity in Europe.


“It’s inevitable Toyota will pass GM in terms of global market share,” said Sasha Kamper, who helps manage $65 billion, including General Motors bonds, at Principal Global Investors in Des Moines, Iowa. “The perception is Toyota creates the better-quality product. That puts GM at a disadvantage.”


Detroit-based General Motors will introduce twice as many vehicles at the show as Toyota, including the Lucerne, a replacement for LeSabre. “This is a long-term game we’re in,” said the chief executive, Rick Wagoner, yesterday in an interview. “It’s something that will play out over the next five to 10 years and will depend on who brings out the best products.”


General Motors sold 8.56 million vehicles worldwide in 2003, from a peak of 8.59 million in 2001.Toyota sold 6.78 million.


Ford yesterday introduced the Lincoln Zephyr sedan and Mark LT pickup in a bid to win younger buyers and regain market share from General Motors’ Cadillac and Toyota’s Lexus. Lexus yesterday unveiled a concept version of a sports car, with a 500-horsepower engine with top speed of 200 miles (320 kilometers) per hour.


Nissan, Japan’s second-largest carmaker, unveiled a prototype of its Infiniti Kuraza sport-utility and the Infiniti M35/M45 luxury sedan and the Azeal concept sports coupe. The automaker said they haven’t decided whether the Kuraza and Azeal concept vehicles will go into production.


Toyota already has won the race for profits. The Toyota City-based company’s net income, $10.3 billion in its year that ended in March, was more than 2 1/2 times the $3.82 billion General Motors earned in 2003.


Toyota also outperformed in the stock market. Its shares rose 15% in Japan last year, boosting its stock-market value to $140 billion, more than the combined market value of General Motors, Ford, and DaimlerChrysler. General Motors’ shares fell 25%, for a market capitalization of $22 billion.


Toyota’s American sales of Camry sedans, Prius gasoline-electric cars, Lexus RX 330 SUVs, and other vehicles exceeded 2 million last year, 14 years after hitting 1 million. Toyota reached the milestone in less than half the average time of its rivals.


The four vehicles it is introducing in Detroit include the Avalon and a hybrid version of its Highlander sports utility vehicle that boasts 270 horse power, zero to 60 miles per hour in eight seconds, and more than 600 miles on a tank of gasoline.


Chairman Hiroshi Okuda in November signaled that Toyota may catch or pass General Motors within two years. The two companies sold 40% of all vehicles in America last year.


“The Toyota group is aiming to sell 8.5 million vehicles in 2006,” Mr. Okuda told reporters in Tokyo on November 1.That’s 25% more than in 2003.


“We expect Toyota to be at about 7.6 million by 2006, so their forecast is more aggressive than ours,” said an auto analyst at Global Insight in Lexington, Mass., Rebecca Lindland. Toyota “may have more tricks up their sleeve than we’re aware of,” she said.


General Motors won’t yield the lead without a fight, the vice chairman, Robert Lutz, said at a December 3 product briefing in Sterling Heights, Mich. The strategy: “Attack, attack, attack, fight for market share,” he said.


General Motors’ American market share fell to 27.5% in 2004 from 28.3% a year earlier, according to Autodata Corporation. Toyota rose 1 percentage point to 12.2%.


The American automaker’s market share in an 18-nation region that includes the European Union, Switzerland, Norway, and Iceland fell to 9.6% in 2004 through November from 9.7% a year earlier, according to the European Automobile Manufacturers Association.


Toyota’s share in the same region rose to 5% from 4.8%, the trade group said.


General Motors, after $3 billion in losses over four years in Europe, plans to eliminate 11,500 jobs and cut costs $664 million a year. General Motors Europe is eliminating “capacity we were not utilizing in any way,” including a shift at Ruesselsheim in Germany, spokesman Marc Kempe said.


In America, General Motors plans to shut a Baltimore van plant this year and stop production at a Linden, New Jersey, factory that makes sport-utility vehicles. The company will “take advantage” of attrition, as it has the past decade, Mr. Wagoner said. A Detroit Free Press report that the company will trim 7%, or 8,000 jobs, wasn’t a company estimate, he said.


General Motors has moved closer to Toyota in new-vehicle quality, according to J.D. Power & Associates’ annual survey. General Motors in 2004 remained third, behind Toyota and Honda Motor Company General Motors averaged 134 complaints per 100 vehicles, compared with 130 the previous year. Toyota kept the top ranking even as its complaints rose to 115 from 107.


General Motors is seeking to bring out more new models and cut costs. The automaker is designating some brands, such as Chevrolet and Cadillac, for worldwide sales and targeting others, such as Pontiac and Opel, regionally. In some markets, General Motors is selling cars made in South Korea as Chevrolets.


“I think we’ve got a good strategy and a good plan,” Wagoner told reporters at a December 1 holiday press party in Sterling Heights, Mich. “I’m a little disappointed with the way it’s played out in Europe.”


Some investors question whether General Motors will be able to increase sales in North America or Europe.


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