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Driving to become the Big One

Alisa Roth Dec 22, 2006

TESS VIGELAND: The folks who watch these things have been predicting for a while now that Detroit’s Big Three automakers would soon be the not-quite-as-Big-Three. Looks like it could happen as early as next year. Today Toyota announced it’s planning to build 9.42 million cars in 2007. Enough to make it the biggest carmaker in the world. So we turn to the question… is bigger really better? Alisa Roth has more.

ALISA ROTH: It’s not that Toyota set out to grab the number one spot from GM.

MICHAEL ROBINET: Toyota is not really going after volume for volume’s sake. But they’re going after volume in certain areas, knowing that there’s greate profits available.

Michael Robinet watches the global car industry for consulting firm CSM Worldwide. He says GM’s focus lately is not on expansion, but on redefining its market.

ROBINET: GM has been in a restructuring mode trying to move to a more profitable portfolio and Toyota is expanding in several parts of the world, including the U.S. and Canada but also in markets like China, India and Europe.

Toyota’s been nosing in on some of the Big Three’s territory, too — building more crossover utilities and full-size pickups.

Toyota has other advantages. It costs Toyota much less to produce a car than it does any of its competitors in the Big Three. And Toyota’s management structure makes it easier for the company to respond to demand: a factory can easily decide to make most of its cars with automatic transmissions, say, for the American market.

But that structure also means that Toyota may not be able to expand indefinitely. Consultant Alan Baum says the car maker needs to watch its step.

ALAN BAUM: Toyota is not sold on the basis of, That’s the neatest car around. It’s sold on the reliability, on the quality, on the practicality of the design.

He says a few more recalls like the ones the car maker’s seen lately and it could face some trouble.

In New York, I’m Alisa Roth for Marketplace.

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