GM CEO Vows Fight For Sales

GM CEO Vows Fight For Sales

by Lauren Woods

In an email, General Motors Corp.'s Chairman and CEO, Rick Wagoner, told senior executives that the company has not given up the fight despite being outpaced by the Toyota Motor Corp. in global sales during the first quarter of this year. "We still have the majority of the year in front of us, and we will fight hard for every sale - all the while staying focused on our long-term goals as a global, growing company," he wrote Tuesday shortly after Toyota's sales figures were released.

Wagoner said that GM was surpassed by Toyota largely because of its move to reduce unprofitable sales to fleet customers and the fact that Toyota crushes GM in sales in the Japanese market. "Like many of you, I woke up to news reports today of Toyota passing GM in global sales in the first quarter this year, for the first time ever," Wagoner added in the e-mail. "I didn't welcome this morning's news, and I know you didn't either. But what's important is that we stay focused on implementing our business strategies around the globe, because they are working."

GMs top officials have been trying to stress profitability over sales. A strategy of reducing fleet sales "cost us about 70,000 units in lower daily rental sales in the United States and Canada in the first quarter this year nearly the entire amount of our global sales gap versus Toyota. But it was the right thing to do. Our sales and marketing strategy requires patience, but it's working, and we need to stick with it," Wagoner wrote.

GM Vice Chairman Bob Lutz offered a curt response Wednesday to Toyota's outpacing GM in the first quarter of the year: "My reaction is 'So what?'" GM has been the worldwide leader in auto sales since 1931, when it has overthrown the Ford Motor Co.

In 2006, the Detroit automaker sold 9.1 million vehicles worldwide, down from the 9.17 million in 2005, reporting a net loss of $2 billion, lessening its $10.4 billion loss in 2005. In the previous year, Toyota sold 8.8 million vehicles, up eight percent and earned over $11 billion in its last fiscal year. The Japanese automaker said that it expects to sell 9.34 million vehicles this year. GM did not disclose its target sales for this year.

In his e-mail, Wagoner noted that GM outsells Toyota in 12 of the 15 top auto markets worldwide, and still outsold Toyota by 1.5 million units in the U.S. in the previous year. "One question is where did Toyota pass us in sales? Basically, Toyota beats us badly in their home market of Japan (by 2.4 million units on an annual basis), and we win in most other markets," he wrote. The CEO also noted that the automaker is "staying focused on further reducing our still huge health care cost disadvantage versus Toyota and other non-U.S. based manufacturers."

Toyota stepped up its lobbying efforts Wednesday in Washington, stressing its investment in U.S. at a time when some company officials fear a backlash. Some 100 U.S. Toyota employees - including assistant regional managers, plant executives and financial executives - fanned out on Capitol Hill to take part in a prescheduled "grassroots lobbying effort," spokeswoman Martha Voss said.

"They are here to touch base and say, 'We're here, we're from your district. Here's what kind of jobs and investments we have,'" Voss said, adding the timing had nothing to do with the sales milestone. Toyota's lobbying efforts are downright obvious. "They outspend us," Lutz said in January. "It is my considered opinion that Toyota has more clout in Washington than we do."

Another issue domestic automakers have been complaining stridently about is the value of the Japanese yen. Automakers dispute Japanese currency "manipulation" unfairly gives Toyota, Honda and Nissan up to a $4,000 per vehicle subsidy. It made American cars more costly in Japan and Japanese imports less expensive in America. This is true with other Detroit automakers. Compared with the assembly of foreign car parts, it would be difficult for the assemblage of Jeep cold air intake and other US auto parts to penetrate other territories especially Japan.

Two-thirds of the U.S. $88 billion trade deficit with Japan is auto-related. Last month, U.S. Sen. Debbie Stabenow, D-Lansing, introduced a bill dubbed the Japanese Currency Manipulation Act, which would force Japan's government "to take action to stop subsidizing millions of auto exports to the U.S. by bringing its currency into proper alignment with the U.S. dollar," said a statement from the Automotive Trade Policy Council, a group representing GM, Ford and DaimlerChrysler AG.

The group said the subsidy provides a windfall that ranges up to "$10,000 per vehicle for higher-end Japanese imported SUVs such as those sold by Toyota under the Lexus brand."

The National Security Council (NSC) spokesman Dave McCormick defended the administration's approach. This is what is has to say: "We look to have open markets in all areas, and are focused on continuing to find ways for Japan to open up its markets, particularly for foreign investment in the automotive sector."