Toyota overtook GM in first-half world sales

updated 3:27 p.m. ET July 23, 2008

TOKYO - General Motors Corp., pummeled by falling U.S. sales and high gas prices, lost the global sales lead to Toyota Motor Corp. in the first half of this year, but the churning market makes it difficult to predict which automaker will end the year on top.

Toyota sold 4,817,941 vehicles globally during the first six months of the year, company spokesman Hideaki Homma said Wednesday, beating GM by 277,532 vehicles. Toyota said its global sales rose 2 percent from the same period the year before, while GM’s sales fell 3 percent.

It’s the second time Toyota has beaten GM in sales in the first half of the year. In 2007, Toyota outsold GM by about 50,000 vehicles, although GM eked out a win for the full year, retaining its 77-year position as the world’s largest automaker by sales.

Toyota didn’t release regional sales totals, but the weakened U.S. market appeared to be the biggest battleground. With its reputation for small, fuel-efficient cars and less exposure to the plummeting truck and SUV market, Toyota’s U.S. sales fell 6 percent, compared with a 16 percent drop for GM. Industrywide sales fell 10 percent.

“The U.S. is definitely the sore spot,” said Erich Merkle, an auto analyst with Crowe Chizek and Co., a Grand Rapids accounting and consulting company. “Toyota is not doing not well in SUVs and pickups either, but it’s in a pretty good position in the small car and midsize sedan segments.”

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Outside North America, GM’s sales grew 10 percent. The automaker reported exploding sales in emerging markets like Russia, where sales were up 34 percent in the second quarter, and China, where sales rose 14 percent. GM said that despite the tough sales environment in mature markets like the U.S. and Japan, it predicts industrywide global sales will rise 2.5 percent this year to a new record of 72 million vehicles.

“The growth momentum in emerging markets is still strong,” said Mike DiGiovanni, GM’s executive director of global market and industry analysis.

Investors shared that optimism, pushing GM shares up 14 percent before they tapered off later in the day. GM shares were up 51 cents, or 3.6 percent, to $14.83 in afternoon trading. Toyota’s U.S. shares fell 43 cents to $92.44.

Still, GM said its gains elsewhere have yet to make up for its losses in North America, where sales fell 20 percent in the second quarter. The automaker blamed high gas prices, which have caused a steep decline in U.S. truck and SUV sales, as well as a nearly three-month strike at American Axle and Manufacturing Holdings Inc. that shut down much of GM’s production.

In response, GM is closing four North American assembly plants, cutting thousands of jobs, selling assets and suspending its dividend in an effort to raise cash. GM has $24 billion in cash and access to $7 billion in credit but has been burning through about $1 billion per month.

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