Competitive Connection

May 7, 2007

What others are saying . . .
Globalization helping GM
GM's contrasting efforts in Asia and North America show why it may emerge as the strongest of the three U.S. automakers, 18 months after Chief Executive Officer Rick Wagoner had to deny bankruptcy speculation. By pushing sales in developing countries while slashing costs in expensive-labor markets like the U.S., GM may distance itself from the woes of Ford and Chrysler.

GM is expanding in Asia and other developing markets. GM employment in those markets has grown 37 percent since 2000, as sales have risen 66 percent, to a third of the company's total. GM has risen to first place from second in a combined market of 11 developing countries including Russia, India and China. GM's China sales jumped 32 percent last year.

Chief Financial Officer Fritz Henderson predicted in March that GM will still burn more cash than it produces this year, increasing the urgency to generate revenue from growing markets.

 “It's to the point where we're investing a lot in China, but frankly, we're making a lot of profit,” Wagoner said. “So it contributes to the well-being of the rest of our business.”–Source: Bloomberg, May 2, 2007
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A look at the competition
Perspective from Toyota’s top US executive
Yuki Funo is the chairman and CEO of Toyota Motor Sales USA—the top Japanese executive for Toyota in North America. He recently sat down with BusinessWeek to discuss some of the issues confronting Toyota.
Someone I know says Toyota really believes and nurtures the idea that the company should be able to build a car with no problems or flaws. When this person does business with Ford and GM, it's different, they tell me.
With the Toyota Way…one of the key elements is kaizen: continuous improvement. There's no end to it. It's a never-ending journey. Respect for people is another important element. Employees. Customers. Suppliers. When it comes to consumers, they demand changes from time to time. We have to always keep watching what the consumer wants. If we base our business on what the customer wants, there's no end to the improvement we can achieve.
From time to time, a GM or Ford exec will complain about an uneven playing field: a health-care advantage for Toyota, or monetary policy that favors Japanese products. Do you and your colleagues read that and pay attention?
We know health care is very difficult situation for the Big Three. It's a fact of life that they incur more costs. That's the political and economic history of the U.S. A decision was made some years back on what they would give to workers. To some degree, the problem is of their own creation. Not all the workers in every industry receive as high a medical benefit as in the auto industry. –Source: Business Week, April 27, 2007
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What others are saying . . .
Customers & domestic part content
The domestic parts content figures have not been a drag on Japanese automakers' sales in the United States, and several studies have shown that buyers tend to ignore those numbers on the window sticker. But there is some evidence that American buyers may simply not know much about automotive sourcing.

Art Spinella, an industry sales expert with CNW Marketing Research, held focus groups in five cities last month to measure perceptions of Toyota's American-ness. After showing the groups the parts content figures for major automakers, a majority of those tested were surprised that Toyota's 48 percent average was so far below that of Detroit automakers.

"The perception among most folks was that there was far more North American content in Toyota than Honda," Spinella said. "They were very surprised at the relatively low percentage in Toyota, overall, and somewhat disappointed."–Source: The Detroit Free Press, April 29, 2007
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A look at the competition
Toyota to cut about 370 temporary jobs in Indiana
About 370 temporary workers at the Toyota plant in Princeton, Ind., will lose their jobs by the end of the year, due in part to declining demand for the Sequoia sport utility vehicle.  Kelly Dillon, a plant spokeswoman, said Toyota's 4,700 regular workers are not affected.
   
The 370 workers are employed by Personnel Management, based in Greenwood, Ind. It provides Toyota a temporary work force that can be increased or reduced to match the plant's needs.

"Since this is a cyclical industry, it will go up and it will go down," Dillon said. –Source: The Associated Press, April 24, 2007
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Then and Now
Small cars are the next big thing
After years of making their mass-market cars more expensive, the world's automakers have abruptly shifted into reverse. With stagnant growth in the U.S., Europe, and Japan, they are now eyeing emerging markets for new opportunities. That means redesigning the car for buyers who might otherwise be able to afford only a motorcycle. Low-cost cars are "the single most important trend in the automotive industry today," says Vikas Tibrewala, the Paris-based executive director of the Monitor Group consultancy.
 
There's no lack of potential customers: Hundreds of millions of Chinese, Indians, Brazilians, Russians, and others will likely join the middle class in the coming decade, and cars are sure to be at the top of their shopping lists. As a result, the global car market is polarizing: The luxury segment continues to grow, cheap cars boom, and everything else gets squeezed. By 2012, the market for vehicles priced under $10,000 is likely to reach 18 million cars, or a fifth of world auto sales, according to Roland Berger Strategy Consultants. That's up from 12 million today. –Source: Business Week, April 23, 2007