Toyota As Underdog?

We're still not sure exactly how the story about Toyota expanding production 40% globally and 20% here in the United States, which we reported on Monday only today seems to be resonating in the auto press. Well, ok, maybe it's because yesterday ToMoCo President Katsuaki "Ken" Watanabe told media folks the automaker plans to expand production in order to meet sales demand they're expecting to reach 9.8 million in sales by 2008. But that's not stopping people from speculating Toyota'll make the jump to number one world's biggest automaker this year. Ashvin Chotai, director of Asian forecasting for Global Insight in London, told the Freep today he estimates Toyota will outsell GM this year and grow to sell about 10.5 million vehicles by 2011, while GM sales rise to 9.6 million. Somehow we're not entirely convinced ToMoCo'll be making a jump in sales from its expectation of 8.85 million vehicles to over 9.2 million, but whatevs. But maybe Chotai's comments were...

...lost in translation. We mean, he is based out of London.

But that's not the only commentary on ToMoCo today. There's also some rather interesting speculation we've speculated for a while now coming from Chris Isidore, over at CNN Money. Chris is of the opinion that GM, Ford and Chrysler, will be well positioned to take on Toyota "if and when they make imporvements in their cost structure they are now striving to achieve."

Specifically, it's an issue of how well the "Big Three" do at the negotiating table in 2007 with the UAW. Because as we've said for a while now, those higher labor and legacy costs aren't just numbers on an earnings statement, they're really hurting the ability for all three companies to put new product in the showrooms by decreasing the available money for R&D. In fact, Isidore makes the argument, with the help of David "I Like Cars From Michigan" Cole over at the Ann Arbor, MI-based Center for Automotive Research (NAMBLA), that with the influx of usable capital from reduction in a US-based manufacturing workforce and a reduction in benefit levels, GM would be able to better compete with the wanna-be number one stunna of ToMoCo.

"If GM were to have Toyota's health care costs, that's roughly equal to it having enough to develop five new products a year," said Cole. "The changes to their cost structure that have been made and undoubtedly will be made in the 2007 contract will be a huge improvement in the Big Three's competitive position."

But wait, there's more. Isidore also claims that much of the growth Toyota's seen as of late has come from growth in areas they haven't been selling vehicles — like in the SUV and light truck markets. But with the introduction of the new Tundra, there's no more "virgin territory" for the automaker from the land of the rising sun. Thus, any increases in sales growth from this point on will have to be conversion of existing owners, and not only is that difficult to do, it's also very costly.

So is Toyota an underdog? We don't really know, but we're of the impression Ken'd look awfully hot in the costume.

Toyota could see bumpy road ahead [CNNMoney.com]
Toyota accelerates push for No. 1 [Freep]