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On track to top, Toyota's first quarter global sales beat GM's

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TOKYO (AP) _ For the first time ever, Toyota sold more vehicles globally in a quarter than General Motors, preliminary January-March figures show, the clearest sign yet that the Japanese company is on track to overtake its U.S. rival as the world's top automaker.

Toyota Motor Corp.'s success is fuelled by robust demand for its reliable, fuel-efficient models, including the Camry, Corolla, Yaris and gas-electric hybrid Prius.

It also comes at a time when General Motors Corp., which lost US$2 billion last year, has been forced to scale back production and cut costs in a bid to revive its sliding fortunes, even as it leads in China's booming market.

The trends are also a mixed blessing for the North American car industry, as Toyota adds assembly plants and thousands of jobs in the United States and Canada, while GM and the other Big Three carmakers, Ford and Chrysler, pare back their operations in both countries to deal with falling demand for their vehicles.

Toyota has 14 assembly plants in North America. In Canada, Toyota has assembly operations in Cambridge in southwestern Ontario and plans to open a new plant in Woodstock next year. Meanwhile, GM's assembly and parts plants are in Oshawa, St. Catharines and Windsor, Ont.

GM Canada also has a 50-50 joint venture with Suzuki in Ingersoll, Ont.

Final bragging rights as the world's top automaker _ a title GM has held for 76 years _ won't be decided until global vehicle production numbers get tallied for the full year.

But Tuesday's numbers show that Toyota is getting closer. The Japanese company sold 2.35 million vehicles worldwide in the first quarter, Toyota said, surpassing the 2.26 million vehicles GM said it sold in the period, according to preliminary figures.

In 2006, Toyota's global output rose 10 per cent to 9.018 million vehicles, while GM and its affiliates produced 9.18 million vehicles worldwide _ a gap of about 162,000. In the first quarter, Toyota made 2.37 million units while GM had expected to produce 2.34 million during the same period, and has not given a final number.

Analysts say Toyota is building on its lead by investing in ecological technology, opening plants around the world, developing new models and wooing drivers with solid marketing that drives home its brand power.

Those are precisely areas that GM has fallen behind Toyota, and will be hard pressed to play catch-up, making it more likely than not that Toyota will outstrip GM for the full year, they say.

``Toyota sales are booming because of its good image around the world about reliability and ecological technology,'' said Koji Endo, auto analyst with Credit Suisse in Tokyo. ``It's just the opposite for GM, and its image is deteriorating.''

The cycle of good news keeps getting better for Toyota as it can use its profits to keep growing. With the company doing so well, morale is high at Toyota, keeping the positive cycle going, while GM tends to be dragged down by battles with its union, Endo said.

But Endo also warned that increased size also brings other problems like trying to ensure quality and manage a sprawling network of manufacturing and sales.

``As your volume gets bigger and bigger, in many cases efficiency tends to drop,'' he said. ``There might be a risk of being over-stretched.''

Toyota was founded in 1937 by the Toyoda family, whose members continue to play key roles and are a symbol of emotional unity for the company and its employees.

Perhaps more famous than the Toyoda family are the company's innovators, such as Taiichi Ohno, credited with inventing just-in-time production to reduce inventory, and the philosophy of worker-empowerment called ``kaizen,'' allowing workers to keep improving production methods and hold the critical power of shutting down the assembly line at any time.

Companies around the world, including those outside the auto industry, have adopted Toyota's methods. Universities, both in and outside Japan, study the Toyota method.

Toyota is also well-known for nurturing worker loyalty by offering lifetime employment. The last time Toyota resorted to massive job cuts was during hard times in 1950.

Toyota has long beaten GM in profitability, racking up record profits for the past four years, with US$11.8 billion profit for the fiscal year through March 2006.

GM, meanwhile, has been negotiating severance packages with thousands of workers in an effort to turn around its North American operations. In the fourth quarter of 2006, it reported a profit of $950 million, a big turnaround from a loss of $6.6 billion a year ago.

Modesty is also a Toyota trademark, and executives have repeatedly played down the prospects of overtaking GM.

Asked that question last week in Detroit, Toyota president Katsuaki Watanabe emphasized that Toyota must continue to improve its quality from the top down to remain a leader in the auto industry.

``We're still developing in many regions of the world. I don't regard that as a success yet.''

GM doesn't give yearly forecasts, but Toyota is shooting for global output of 9.42 million vehicles and sales of 9.34 million units.

While Toyota appears on course to supplant General Motors this year, GM's moves to boost overseas production could keep it in the running. The company's sales in China jumped 32 per cent last year to 876,747 units, making it the No. 1 seller there. It is also building a new factory in India, another market with tremendous potential.

But analysts note that Toyota's success required long-term planning and years of hard work.

``Winning didn't happen overnight,'' said Koichi Shimokawa, business administration professor at Tokai Gakuen University. ``Japanese makers built their business, slowly but surely, accumulating technology and developing good cars.''

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On track to top, Toyota's first quarter global sales beat GM's
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