GM's Empty Challenge (GM)(TM)

GM says that the spot as the world’s largest car maker is worth fighting for, just as Toyota is about to snatch the crown. The company said its plants could produce more cars that Toyota said it would sell in 2007, a number that the Japanes company puts at 9.34. million. But, producing what you sell can be tough, as GM as found out as inventories balloned last year.

In a bit of a paradox, GM said it also plans to close more plants and work over the UAW for more concessions. GM said that healthcare costs have put the company as a $5 billion competitive disadvantage. Reuters say that GM’s health-care costs average $1,500 per vehicle, compared with about $200 for Japanese rival Toyota Motor Corp. So, will the talks turn acrimonious? If the UAW wants to remain a union with any power, that is a possibility, as is a stike of some magnitude if the union has to dig in.

GM has one chance to keep up with Toyota. In 2006, it sold 55% of its cars overseas. GM is now that largest seller of cars in China based on its joint ventures with local companies. It is also expanding into markets like Russia and India.

What an irony? GM may keep up with Toyota by selling cars overseas.

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.