Automotive News Europe - Guido Reinking - October 20, 2008 14:59 CET
When senior Volkswagen executives said the Wolfsburg-based automaker intended to overtake Toyota in global sales, profit and quality, more than a few industry watchers thought they had lost touch with reality. I was one of the skeptics.
Overtake Toyota – the industry's gold standard for productivity, quality assurance, efficiency and customer orientation – to say nothing of global profit- and sales leader? Impossible!
But look again: The top dog is losing its aura of invincibility.
In Germany, sales are off 22 percent this year. In the U.S., Toyota has been hit even harder. Its sales there collapsed 32.3 percent in September, worse even than the fall taken by sickly General Motors.
Contrary to popular perception, Toyota's dazzling growth over the past 10 years has been led by light trucks, not the gas-sipping small cars and hybrids that are so associated with its brand. Sales of its large vehicles – SUVs, crossovers, pickups and luxury Lexus sedans – have more than doubled in the past decade.
That is why the current automotive crisis is hitting Toyota harder than many other manufacturers. Its profit is projected to decline by as much as 40 percent this fiscal year, which would yield a margin of barely 6 percent. That would put it on VW's level.
There is little doubt that Toyota will remain the global sales leader for some years to come. But there is danger in that success. Becoming No. 1 demands different qualities than staying No. 1. Can the company do both?
In that sense, it may be fortunate for Toyota that Volkswagen has vowed to overtake it. That's because Toyota, without meaningful competition, may have stopped striving for perfection.