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GM beats Toyota in '07 sales — just barely

Long the epitome of America’s industrial might, General Motors is now a symbol of America’s industrial plight: caught by foreign competition.
/ Source: The Associated Press

Long the epitome of America’s industrial might, General Motors is now a symbol of America’s industrial plight: an aging giant being chased down by foreign competition.

GM conceded Wednesday that Toyota Motor Corp. pulled to a virtual dead heat last year in the global sales race, each of them selling about 9.37 million vehicles, in another sign that the balance of industrial power is shifting from West to East.

GM may be able to technically claim the No. 1 spot — barely — but Toyota is breathing down its neck. GM has been the global sales leader since 1931, when Herbert Hoover was president and GM’s top seller was the Chevrolet 9AE, a two-door, five-passenger coach that cost just $545.

GM's figure of 9,369,524 vehicles sold around the world was a 3 percent increase from 2006 for GM. But Toyota’s strong U.S. sales growth in recent years — and declining sales for GM in its own backyard — tightened the gap.

Late Wednesday, Toyota said it sold 9.366 million vehicles around the world last year, about 3,000 fewer than the tally from the Detroit auto giant.

Both companies say winning the race isn’t a high priority, but the news still angered GM worker Todd Horton in Spring Hill, Tenn., who sees it as a sign of America’s waning strength.

“It makes me mad. It kind of angers me, kind of frustrates me,” Horton said Wednesday. “You always want to be No. 1.”

To Horton, whose plant is retooling to make a Chevrolet crossover vehicle, the tie is also scary because it’s costing Americans good-paying manufacturing jobs.

“To think that we’re losing that stature. That we’re becoming a country that’s not No. 1 in building anymore,” he said.

Globalization, although painful for workers in the auto sector and other industries, has helped the U.S. economy overall, keeping unemployment relatively low and fostering growth, said Professor Louis Lataif, the dean of Boston University’s School of Management.

“The competitive marketplace is remarkably efficient over time,” Lataif said. “Nothing is forever, certainly. That a company the size of General Motors can be overtaken is a testament to free-market capitalism.”

Although the auto and steel industries, among others, have been hurt by global competition, it doesn’t necessarily mean wealth is shifting away from the U.S. to emerging countries, he said.

“You’ve expanded the whole market,” Lataif said. “It’s not as if they succeed and we fail, because wealth is infinite.”

That Toyota caught GM is largely due to the Detroit-based GM faltering in its home market, industry analysts say.

Toyota’s share of the U.S. market has more than doubled since 1990, when it sold about 1 million vehicles for a 7.5 percent share of the domestic market, according to Ward’s AutoInfoBank.

In that time Toyota sales have grown briskly as drivers opted for its smaller, fuel-efficient cars and their reputation for reliability. In 2007, Toyota sold 2.6 million vehicles in the United States for a 16 percent share of the market.

GM, third on the Fortune 500 list of U.S. corporations, remains the domestic auto sales leader. But its market share has dropped from about 35 percent in 1990 to about 24 percent in 2007. GM sold 3.8 million vehicles in the United States last year.

To Toyota workers, the news was a welcome affirmation of their hard work, said Melissa Hargis, an assembly line worker at Toyota’s factory in Georgetown, Ky.

“We’re excited because we’re proud of the products we build on a daily basis,” Hargis, 39, said by phone.

She said that Toyota’s new status at the top of the auto industry was good for job security.

Aaron Bragman, an analyst with the consulting firm Global Insight, said GM and Toyota have expanded almost evenly in most emerging markets but GM has been hurt by declines in North America as it intentionally cut incentives and reduced low-profit sales to rental car companies.

Overall, GM’s worldwide sales in 2007 were the second-best in its 100-year history. It set a sales record in China by selling more than a million vehicles, set a record in Brazil with nearly 500,000 and doubled sales in Russia.

GM Chairman and Chief Executive Rick Wagoner has pledged to defend the global sales title, but said the company would not abandon its U.S. strategy of cutting back on low-margin sales.

Burgeoning markets in places like China, Russia and South America, and other regions with growing middle classes, will probably decide the sales title in coming years.

While the U.S. economy sputters, China and India continue to boom. China’s economy is growing at about 11 percent a year, and India’s at about 9 percent, two of the fastest growth rates in the world.

In the U.S., gross domestic product grew by only 2.2 percent last year. Auto analysts foresee slower growth in the mature markets of North America and Europe, and the auto market in Japan is shrinking.

Toyota is setting up more overseas plants and aims to sell 9.85 million vehicles this year, 5 percent more than in 2007. GM would not give a global sales forecast for this year.

Toyota executives have consistently brushed off questions about becoming No. 1, and some have acknowledged they are nervous about it due to fears about a U.S. political backlash reminiscent of the “Japan-bashing” in the 1980s and ’90s, when Japan was accused of taking jobs from American workers.

Earlier this month, Toyota deposed Ford Motor Co. as the No. 2 auto seller in the U.S. in 2007.

GM shares rose $2.05, or 8.67 percent, to $25.70 on Wednesday, while Toyota’s U.S. shares rose $2.34, or 2.41 percent, to $99.25.