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Toyota Closing In On GM

Japanese Ramp Up as U.S. Automakers Cut Back

September 19, 2006

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The race for the title of world's No. 1 automaker is pretty well decided. Though General Motors still holds a shaky lead, it is losing traction and Toyota, having already left Ford and Chrysler in its dust, is closing in fast.

In fact, the only remaining question is when Toyota flashes past ailing GM.

Fueled by healthy earnings and strong sales, the Japanese automaker is boosting overseas production by 40 percent to 5 million vehicles by 2008 and planning for higher production in North America as well.

The news from Toyota follows the Ford decision to cut thousands of jobs and close two plants to cut costs. At the same time DaimlerChrysler announced plans to cut U.S. production through the rest of 2006. GM announced similar plans earlier this year.

So while the U.S. Big 3 are closing plants, letting workers go, and trimming production amid weak sales, Japanese manufacturers, including Toyota and Honda Motor Co., are posting record earnings and cranking up output to keep up with demand.

In North America alone, the world's largest auto market, Toyota plans to raise production by 20 percent to 1.84 million. The automaker also expects to raise production for the first time above 1 million vehicles in Asia In China, Toyota intends to quadruple production from 2005 levels to 600,000 units.

In all, Toyota is on track to produce 9.1 million vehicles in 2008.

The Big 3, which rely more on light trucks for profits than their foreign competitors, have been hurt by declining sales of pickups as customers switch to more fuel-efficient vehicles.

They are also struggling with the need to reduce the cost of big pay and benefits packages for workers and retirees.

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