Last year, Japanese Toyota surged past General Motors and became the
world's leading automaker by sales. Though Toyota is now the No. 1 car maker in
the world, the underlying truth is that its success is rather relativeat the
expense of the more rapid fall of GM. In fact, Toyota did not race past GM in
global sales, rather it simply managed not to fall like its US rival. Even at the
moment of becoming No. 1, Toyota has been affected badly by the global
slowdown like its competitors across the globe, and is struggling due to sharp
deceleration in sales and global overcapacity. Toyota sold fewer cars in
2008 than it did in 2007; its first yearly sales declined in 10 years. For the
nine months ended December 31, 2008, consolidated vehicle sales in Japan
and overseas decreased by 494 thousand units, or 7.5%, to 6,089 thousand
units, compared to nine months ended December 31, 2007. Sales have plunged
not only in the crucial US market but also in Europe, Japan and emerging
economies. Now the automaker is working hard to reduce excess inventory by
stopping assembly lines on some days.
Barring the global slowdown, which is forcing the employee-friendly
Toyota to cut its temporary workforce and even to postpone its projects, a slew of
problems such as technical snags, quality concerns, wrong product mix and
of course the rising yen are also jeopardizing the automaker's prospects.
After years of conservative growth, Toyota, which had accelerated its
expansion over the past decade, is now battling hard to put the brakes at the time
of slowdown. Now, going from rapid growth to dramatic shrinkage is a
huge challenge for sure to the company.
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