As the year comes to a close, the speculation about which of the three largest car companies will be number one in global sales has started. Toyota Motor Corp. (NYSE: TM), Volkswagen or General Motors Co. (NYSE: GM) will get bragging rights. But profitability will be more important to the shareholders of the three companies. To them, the race for first place will not be as important.
Toyota's chance to have the top spot is based mostly on its recovery from the Japanese earthquake, which in March will be two years past. The company lost months of full production in 2011. Sales of even its most popular models like the Prius slowed. But since Toyota manufacturing came back online, sales have spiked in markets, led by the United States. That gain may be offset by a drop in sales in China because of a territorial dispute between Japan and the People's Republic.
Volkswagen's advantage largely is its presence in China. Sales there generally tie with GM for first place. VW recently announced it would spend billions of dollars to expand outside its base in Europe, where car sales have dropped sharply. Management has set 2018 as the year it will move into the number one global position. But when sales of its Porsche brand are included, VW already may be close to moving past GM and Toyota.
GM also has benefited from its lead in China. And it remains the top car company in the U.S., based on sales. But European sales have fallen so much that its Opel and Vauxhall operations have lost billions of dollars, hurt by a drop in market share coupled with the collapse of most economies in the European Union.
First place may be good for marketing and corporate image, but with Toyota's trouble in China, and VW and GM struggling in Europe, the top position could well be combined with slim profits, or none.
Douglas A. McIntyre
Filed under: 24/7 Wall St. Wire, Autos Tagged: featured, GM, TM