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Toyota Cuts in Front of Ford as No. 2

Japanese firm's rapid growth shows that even biggest U.S. names are unsafe in global market.

January 24, 2004|John O'Dell | Times Staff Writer

Japanese giant Toyota Motor Corp. sped past American corporate icon Ford Motor Co. last year to become the world's second-biggest car company, according to sales figures released Friday.

The ascension marks a major milestone for Toyota, which began as a small weaving factory in 1918, didn't produce its first vehicle until 1935 and as recently as 1966 sold a mere 20,000 cars and trucks in the crucial U.S. auto market.

Its overtaking of Ford -- a company that gave birth to the auto industry when it created the first mass-production assembly line nearly a century ago -- is a powerful symbol of how even the biggest names in business aren't safe from bruising competition in the global marketplace.

Toyota's preliminary figures show that the Tokyo-based automaker's worldwide retail sales climbed about 10% to 6.78 million in 2003, ousting Ford from the No. 2 spot it held for decades. General Motors Corp., with global sales of more than 8 million cars and pickup trucks, remains firmly in the No. 1 spot it has held for 75 years.

In the eyes of some industry experts, ceding ground to Toyota is a big blow for Ford. Analysts estimate Ford's worldwide retail sales for last year at about 6.4 million units. "Being second in such an important global industry can be an important marketing tool that it has now lost," said Bob Schnorbus, chief economist for J.D. Power & Associates.

But the numbers speak as much to Toyota's rise as they do to Ford's fall.

Toyota Chairman Hiroshi Okuda has set a lofty goal of capturing 15% of the global auto market by early next decade, up from 10% today. To do so, Toyota must continue to snatch business away from traditional American brands as well as Asian and European rivals.

"Toyota is pursuing world domination and doing it successfully," said Gordon Wangers, president of AMCI, an automotive market research firm in Marina del Rey.

In the U.S., Toyota now ranks fourth in passenger vehicle sales and is close to overtaking Chrysler Group for the third spot.

Last year, Toyota captured a company record of 11.2% of the U.S. auto market, where it has been the top-selling import brand since 1975. The Toyota Camry sedan was the top-selling passenger car in the U.S. in 2003 -- for the sixth time in seven years -- while the company's Lexus line was the most popular luxury brand for the fourth consecutive year.

It is because of this rapid growth that Wall Street now pegs Toyota's total stock value higher than GM, Ford and DaimlerChrysler combined.

Despite all that, Toyota contends it is not engaged in a race with the domestic brands.

"Our focus is on customer satisfaction," said Xavier Dominicis, a spokesman for Toyota's import, distribution and marketing arm, Toyota Motor Sales USA, in Torrance. No parties are planned at Toyota's U.S. headquarters for the official announcement Monday of the global sales figures, he said.

In recent decades, Toyota has expanded into all major auto markets and now sells cars in 160 countries, with manufacturing plants in 27 nations. Toyota's sales figures include those of its subsidiaries Hino Motors and Daihatsu Motor Co.

All told, Toyota sold 1.87 million cars and pickup trucks in the U.S. in 2003, just under the 2 million units it sold in Japan. But the U.S. auto market -- the world's largest -- is the most important for Toyota because it accounts for about 70% of the company's profit.

Ford too has downplayed Toyota's gains.

Chief Executive William Clay Ford Jr., great-grandson of founder Henry Ford, said his company's new focus was on regaining profitability, not hanging on to market share. Last year, Ford posted a $495-million profit after racking up $6.4 billion in losses in 2001 and 2002. Ford's sales figures include its foreign brands Volvo, Land Rover, Jaguar and Aston Martin.

Although Ford's pickup truck sales, led by the F-150, are strong, the company's passenger car sales continue to slip. As a result, Ford finished the year with a 19.5% U.S. market share, its lowest since Henry Ford was running the company in 1929.

Ford and GM are now refocusing their efforts on passenger cars, a market that Toyota and Honda have dominated in recent years. Meanwhile, the big European and Japanese automakers -- Toyota among them -- have begun attacking the domestics' hold on the profitable pickup and SUV markets.

Toyota also has taken a leadership position in the so-called green car market with its innovative Prius sedan and a pair of upcoming SUVs, all powered by a hybrid electric-and-gas engine with dramatically improved fuel economy.

The carmaker's unlikely start dates to 1933, when Kiichiro Toyoda set up a small auto manufacturing unit in his father's Toyoda Automatic Loom Works.

Although the family's name is Toyoda, the company's was changed to Toyota for simplified pronunciation and because, in Japan, eight is a lucky number and it takes eight strokes of a calligrapher's pen to write "Toyota" in one popular form of Japanese script.

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