Toyota Poised to Surpass GM

Japanese Automaker to Raise Production by 10%

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DETROIT (AdAge.com) -- Toyota Motor Corp.'s brash plan to increase global vehicle production next year 10% threatens beleaguered General Motors Corp.'s longstanding crown as the world's biggest automaker.


The Toyota announcement that it would raise production to 9.06 million units across all its brands is unusual, since in the past Toyota's Japanese management tended not to appear aggressive, said Todd Turner, president of auto consultant CarConcepts. But "the tone has changed" at the company since the top ranks changed 18 months ago, he noted.

"Make no mistake, Toyota is bursting with energy and its appetite for growth is truly insatiable," Katsuaki Watanabe, president of Toyota Motor Corp., wrote in the company's latest annual report.

GM reducing output
But even without hiking production, Toyota could well leapfrog GM, said Mr. Turner, because the American company is cutting its own output. In 2004, GM produced 8.7 million vehicles globally, according to Automotive News, but it has lost $3.8 billion in the 2005's first three quarters.

In recent months, troubled GM has announced plans to halt production at 12 North American manufacturing plants and cut 30,000 jobs by 2008. It's also planning to trim net material costs by $1 billion next year and reduce retiree-health-care costs by about $3 billion annually.

Toyota's announcement came two weeks after GM Chairman-CEO Rick Wagoner criticized Japan's "unfair trade practices" to artificially weaken the yen in a Wall Street Journal op-ed piece. Mr. Wagoner wrote that an unnamed, leading Japanese automaker reported that for each movement of one yen against the dollar, it gains 20 billion yen in additional profitability, or nearly $170 million. "No wonder Japanese automakers have noted their recent record profits were aided by exchange rates," he wrote.

The GM's chieftain's attack on Japan was the second by the automakers in recent months. GM's chief economist testified in late September before a congressional panel that the Japanese government supported a weak yen that gave its automakers a cost advantage in the U.S. of up to $12,000 per vehicle.

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