Toyota Rubs Salt In Detroit's Wounds

Not enough that Toyota (TM) has been stealing market share left and right from GM (GM), Ford (F), and Chrysler (DCX). It is making a lot of money in the process to boot. In the company’s fiscal third quarter, the Japanese company made $3.55 billion, an increase of over 7% from the December quarter the year before.

To make matters worse, if they could get worse, Toyota’s sales in North America rose almost 19% during the quarter. That came at someone’s expense, and it is not hard to guess who that someone is.

Autodata now reports that Toyota’s share in the US market at 15.4%.

Detroit really has no immediate answers to Toyota’s success. It can hope that cutting costs will buy it some time as it brings on new models for 2008 and beyond. If the new products fail to at least hold market share the cost cuts may not salvage the North American operations of the Big Three (make it Big Four now that Toyota is ahead of Chrysler).

Two other things Detroit may have going for it are the increasing recalls of Toyota products and the so-called "law of big numbers". Toyota may have trouble keeping its reputation for quality as it opens more plants around the globe, further from Japan and Toyota’s quality control center. The other issue may be that at 15% of the US market, Toyota has to take the most loyal customers from Ford, GM, and Chrysler now. If these companies are not down to their regular buyers, those who come back for the same brand over and over again, they must be getting close.

And, there is the "buy America" thing.

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