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GM moves back ahead of Toyota

Strong China sales for GM, drop in U.S. sales for Toyota in third quarter allow U.S. automaker to move back ahead of Japanese rival in race to be global auto leader.

By Chris Isidore, CNNMoney.com senior writer
October 22 2007: 4:00 AM EDT
NEW YORK (CNNMoney.com) -- General Motors, which fell behind Toyota in global sales for the first time in the first three months of this year, has edged narrowly ahead of its Japanese rival in terms of 2007 sales.

Toyota (Charts) global sales for the first nine months of the year hit 7.05 million vehicles, up 7 percent from a year ago, the Japanese automaker announced early Monday. GM (Charts, Fortune 500) released figures last week that showed global sales of 7.06 million, which was up just over 2 percent from a year ago.

The gap in third quarter sales was slightly larger, as GM sold 2.387 million vehicles, up 4 percent, while Toyota sold 2.237, which also represented a 4 percent gain.

In the first quarter Toyota moved ahead of GM in global sales for the first time. It was slightly behind GM in the second quarter, but it still had the lead in year-to-date global sales for the first six months of the year.

Toyota spokesman Paul Nolasco had no comment on the comparison to GM sales. GM spokesman John McDonald also said the company wasn't particularly concerned with whether it was in first or second place in the sales count.

"We're not focused on being No. 1 and who's No. 2," said McDonald. "We like being No. 1. We've been No. 1 for 76 years on an annual basis. But while it's a real interesting story to the media, I don't know a single customer who uses that criteria when making the decision on where to buy a vehicle."

Tom Libby, senior director of industry analysis for J.D. Power, said that the fact that GM moved back ahead in the race for No. 1 does not mean its competitive challenge from Toyota is behind it.

"This may very well go back and forth from quarter to quarter," he said. "It's obviously a very competitive situation. To draw any major conclusion after a quarter or even three quarters is premature."

GM was helped by particularly strong sales gains in China, which is the fastest growing market for new car sales in the world. Its sales in the Asia Pacific region were up nearly 16 percent in the third quarter, helped by a 21 percent rise in sales of its Chinese joint venture.

Meanwhile Toyota has depended on growth over the years from the United States and North America, the largest market for its vehicles. But as auto sales softened industry wide in the United States in the quarter, Toyota posted a rare year-over-year drop in U.S. sales in the month, seeing its sales decline nearly 5 percent in the United States in the period.

"It is at least partly a geographic story," said Libby. "There are all these different markets growing at different rates."

Libby also said the drop in Toyota sales is a sign that it faces tougher prospects for continued U.S. growth going forward.

"A lot of Toyota's increases in the past were because of going into new segments," said Libby. "But that type of action is pretty much over with. They're now pretty much in every segment of the market. They're now going to have to make the gains in segments they are already in, and that's harder."

Toyota also has to protect against damage to its reputation in the U.S. market. Earlier this month, the influential Consumer Reports survey dropped the Toyota brand from first to fifth place, placing it behind Honda Motor's (Charts) Honda and Acura brands, as well as Toyota Motor's Scion brand and Subaru - in average vehicle reliability.

GM has seen even larger declines in U.S. and North American sales in the the third quarter than Toyota, as sales in both its home country and region were off 6 percent in the quarter compared to a year ago. That's partly because GM