"Dog bites man" isn't news. Likewise, it's not really news that General Motors -- the leader in the U.S. auto market for decades -- is leading again this year. GM might have gone through the mother of all bad patches last year, but lately the General is looking pretty sharp, with fresh leadership and some impressive new models.
Of course, GM's turnaround has some way to go to catch Ford's (NYSE: F) spectacular rebirth as one of the world's most impressive auto companies. But despite Ford's dramatic progress, it's still surprising to dig down into the U.S. sales numbers and see that Ford is beating out Toyota (NYSE: TM) for second place.
Given that Toyota was battling GM for U.S. supremacy not long ago, and that Toyota can still (at least for the moment) claim the "world's largest automaker" crown, that's quite a reversal.
So here's the question: Can Ford sustain its lead?
A look at the numbers
A quick look at a few numbers shows the outline of the story pretty clearly: Overall auto sales in the U.S. are up, though still well below the levels of a few years ago. GM's sales are up somewhat, but not quite keeping pace with the overall market. Toyota's sales are down slightly versus this time last year. And Ford is just plain executing in a big way. Check it out:
|
Automaker |
YTD Sales 2010 |
2009 Sales Through August |
Percentage Change |
|---|---|---|---|
|
General Motors |
$1,461,700 |
$1,374,780 |
6.3% |
|
Ford |
$1,276,362 |
$1,077,850 |
18.4% |
|
Toyota |
$1,164,154 |
$1,170,409 |
(0.5%) |
|
TOTAL US SALES |
$7,661,592 |
$7,069,376 |
8.4% |
Setting aside GM for a moment, there are really two stories here -- Ford's rise and Toyota's fall. On the strength of an intensely focused global strategy and a slew of new world-class products, Ford is exceeding even its own management's expectations. Just Wednesday, CEO Alan Mulally said on Wednesday that he expects the company to return to an investment-grade credit rating "a lot sooner than what we thought," after a strong sale of five-year notes by Ford Motor Credit, the company's finance arm.
That's one more drop in a huge bucket of evidence that Ford has gone from being a teetering old relic to a global powerhouse, as if we needed any. Sure, the company still has a big-time debt overhang -- but with profits (and sales) booming, there's good reason to think that the company will bring that under control before too long. CFO Lewis Booth, a man not known for extravagant predictions, has forecast that the company's cash will exceed its debt by the end of 2011.
Expanding into new markets, leveraging key technology partnerships with companies like Nuance Communications (Nasdaq: NUAN) and Microsoft (Nasdaq: MSFT), and pushing into clean-propulsion technologies in a big way have all been part of the Dearborn giant's recent success.
On the other hand
But Toyota's no technological slouch, either. Despite the recall and PR woes that have driven sales away from Toyota this year, the company remains Japan's largest automaker, well ahead of longtime rival Honda (NYSE: HMC), which has its own problems at the moment. One doesn't have to search very hard to find evidence of Toyota's success with cleaner technologies; the company's distinctive Prius hybrid is the hot-selling green car every automaker would like to have. Even Mercedes-Benz maker Daimler acknowledges Toyota's technological lead; reports in recent days suggest that Toyota is in talks with the German powerhouse to supply hybrid-car parts and technology.
Toyota's manufacturing is the industry's gold standard, and few automakers can match its technological edge, but the company has been knocked in recent years for a lack of distinction and excitement in its product line. As "quality" becomes less of a selling point -- more and more automakers are achieving quality ratings on par with longtime leaders Toyota and Honda -- styling and overall driving experience will become more crucial to winning sales. That's an area in which Toyota's flawless-but-dull products lag the world's best.
To his credit, CEO Akio Toyoda has acknowledged this issue. It's possible that Toyota's investment in Tesla Motors (Nasdaq: TSLA) was motivated in part by a simple desire to share some of Tesla's excitement. It's safe to assume that somewhere deep in Toyota's headquarters, teams of experts are hard at work on engineering more excitement into the company's future products.
How that will play out remains to be seen. But while Toyota's clearly still down, it's not out -- and while Ford is on the upswing in a big way, the battle for global supremacy between the Japanese giant, its two big U.S. rivals, and the other auto heavyweights will likely go on for a long, long time.
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