Transfer of Power in Auto Industry Could be Imminent
In 2008, Toyota (NYSE:TM) surpassed GM (NYSE:GM) as world’s largest car manufacturer [1] by aggressively expanding in North America, while most American auto majors were struggling due to the credit crisis. In 2011, the global automotive market looks set to face a reversal of fortune, and this time the battleground will be Asia. Both Toyota and GM compete globally with other automakers like Ford (NYSE:F), Daimler AG (NYSE:DAI), Honda (NYSE:HMC), Hyundai (SEO:005380), Nissan (PINK:NSANY), etc.
The recent 2011 Q1 results indicate that GM could be on the verge of regaining the top-spot on the global vehicle bestseller list. While GM’s vehicle unit sales surged ahead by 11% year-on-year, Toyota’s vehicle unit sales dipped by around 12% during the same period.
Battleground Asia
While GM has managed to restructure its business after bankruptcy and is posting impressive earnings growth, Toyota has seen a variety of problems since its massive vehicle recalls in the U.S. last year. With China being the largest auto market in the world and with rapid growth in many Asian auto-markets, a dominant position here could provide a spark to regain the top spot on the vehicle bestseller list. GM has managed to corner an impressive market share in China (See: GM Steps on the Gas in China), while Toyota and other Japanese auto majors are cutting back on their global production due to auto parts supply disruptions after the tragic earthquake in Japan (See: Looking at Toyota’s Sales Impact from Quake).
Slumping Japanese consumer confidence [2] indicates that Toyota’s woes are likely to continue over the short-mid term. You can drag the trend lines in the modifiable charts above to see the impact of these trends on GM and Toyota’s respective stock values.
See our full analysis for Toyota stock, and GM stock here.
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