This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and watch out for more Battle of the Brands posts.
The sad part about this subject is watching these two companies going in almost opposite directions -- at least for now. General Motors General Motors Corp. (NYSE: GM) has a current market capitalization of $18 billion versus the behemoth Toyota Motor Corp. (NYSE: TM) with a massive market capitalization of $236 billion, over 13 times bigger than GM. Yet on the surface one would never guess these numbers as their revenues are fairly close in comparison: GM for 2007, estimates revenues of $173 billion, and Toyota's at $200 billion.
It's what's underneath the hood that distinguishes these companies.
Toyota has just come off a five-year period of growth in its per-share earnings at 26% per year, an astounding accomplishment for such a large company. General Motors has experienced flat to negative earnings per share growth over the same five-year period. Toyota is opening new plants, both in Japan and the U.S., to handle demand, while General Motors is closing plants to save costs and resources.
Toyota has set itself apart as the undisputed world leader with the hybrid auto: half combustible engine, half battery powered. The hybrids are still at a price premium to comparable standard combustible, gasoline-powered models, but they will close that gap over the next two or three years. The hybrids come in luxurious lines of the Camry, the Highlander SUV, and the Lexus RX series, as well as the economical Prius model. GM has yet to enter the hybrid field in a serious way.
The General Motors mantra for 2007/2008 is survive at all costs. Closing plants and dealing with the unions over health-care benefits is the first order of business for GM. The long-term health-care benefits provided to the retirees costs in the billions of dollars per year. GM literally has to downsize itself first before growing the company again.
Toyota on the other hand is on a growth curve, looking at 10% top line and bottom line for the next couple of years, and as the hybrid offerings become more and more mainstream, Toyota's positioning will only get stronger. Toyota appears to be taking over the mantle as the world's largest auto manufacturer from GM. General Motors will serve its employees, shareholders, and customers best by becoming a lean, mean machine.
Toyota has the hot hand and appears poised to keep that going. The biggest factor for Toyota has been acceptance by the American consumer and the success of its anchor-model, the Camry, which is now among the top three cars sold in the United States. The Lexus luxury line of autos and SUVs redefined the model for superior customer service. Toyota realized early on that serving and appreciating the customer -- and letting the customer know that -- would win them a strong loyal base. Toyota does not publish these facts, but many dealers will say that 70 to 75% of Lexus buyers are repeat buyers. That is loyalty!
GM and Toyota were once very comparable in almost all statistics. The pendulum has definitely swung for Toyota and appears it will stay that way for a long, long time.
But is GM down and out for good? What do you think?
Georges Yared is the chief investment officer of Yared Investment Research. For more information, see www.georgesyared.com.
Be sure to vote in our poll for Toyota or GM as your preferred brand, and let us know why you love it in the comments. Results of all Battle of the Brands match-ups coming soon.











Reader Comments (Page 1 of 2)
4-08-2007 @ 6:43PM
Rich D said...
RE: Ronald's comment . I read your comment a # of times and I do not understand what point you are making.
I am confused by certain terms such as : Current population ? Do you define Current population as Active Toyota employees ?
Are you saying that Retired Employees of Toyota are receiving No Benefits from Toyota ? Have toyota's retirees simply been Cast to the Side by Toyota Corp . ?
I am a GM retiree who is currently covered by retirement benefits provided by GM. Thank you : Rich
4-08-2007 @ 9:49PM
billy said...
It's time for all american auto workers to pay closer attention to what's happening in the american auto industry. Where going to lose alot of good paying jobs in the next 5 years. what's going to happen to all these people. GM auto worker for 35 years.
4-09-2007 @ 10:29AM
Rhonda said...
For quite some time GM's quality has been very good. The line of the article that defines it for me is " The biggest factor for Toyota has been acceptance by the American consumer", and I think the media has contributed greatly to the perception that GM builds low quality products. Toyota is leading in recalls right now, how many news papers are writing about that? If it was GM ALL the papers and news broadcasts would be trumpeting the stats across the land!
4-09-2007 @ 11:31AM
RONALD said...
AS A RETIRED FORMER EMPLOYEE OF TOYOTA MOST OF THE PEOPLE WHO BUILT THE COMPANY DO NOT SHARE IN THE BENEFITS THAT ARE A NOW AVAILABLE TO THE CURRENT POPULATION SOUNDS LIKE TRADING PLACES WITH GM NOTHING PERSONAL JUST BUSINESS
4-09-2007 @ 1:51PM
Al Ray said...
Let me start by saying I've own a new Toyota recently and I found it to be a terrible vehicle. I thought I'd keep this car for a while, but I got rid of it before two years of ownership.
GM had been loafing for a great number of years, but for about the last three years, some of the new vehicles GM has introduced are not only equal but better than the Toyotas, in engineering and quality. If only the news media would acknowledge that fact. I think, Toyota success will diminish because GM is finally really competing and with GM's superior engineering Toyota glory days will be over.GM has many superior technology about to hit the market. The two mode hybrid transmission will leapfrog everything out there and that is only the beginning. Toyota is not an American company although they are trying to past as American.We Americans can make superior products when we set our mind to do so and GM has decided to do so.
4-10-2007 @ 1:35AM
brettze said...
UAW and management actually had been in a huddle for decades. UAW had been lying to us shareholders about shoddy managemnet practices. Actually, management did a top notch job for UAW at great expenses of GM sharehlders. GM paid workers tens of thousands buck just to say I quit!!! GM sold off assets and pour the proceedings into ever growing UAW pension fund to the tune of over $100 billion. GM is nuturing China operations and GM Daewoo for future harvests that will be funneled into UAW pension funds. GM management turned and plead with shareholders to hold on with cut dividends since 1989 when $5 div was last paid. We shareholders were ripped off over $30 or 50 billions in lost dividends from cuts since 1989. UAW and management works so closely together to keep GM on the edge so to keep shareholders away and they are so damn good at it. GM still have only 500 millin shares floating around against its gigantic #200 billioin in revenues. I can give you a long list of stocks with billions of shares floating and they are still able to earn money on each of those giga shares. GM management and UAW dont want to do that likewisely so they wont have sharheolders as a unnecessary burden on their beneficial fraternity. GM has an authorized allowed 2 billion shares which it can always sell off in case of emergency and thus diluting the long suffering shareholders. Evertything is stacked up in favor of UAW-management favors against shareholders. GM shareholders are unwanted and unappreciated. That is not all... Walmart and McDonald employees could have moved up to GM employment but UAW is not makeing it avaialbe to them so that UAW can laugh at their dinky jobs...Copy this for Ford shareholders as well. see the obvious!!! We are investing in Toyotas and we will be driving in hybrids and GM will not be able to make them except in their PickUps and SUVs. UAW dont care as they are making sure that the managaement is still doing the top notch job of protecting UAW's sweet asses at great expenses of shareholders. GM and Ford is Main Street Stocks and nothing more.... UAW is laughing as I write...
4-10-2007 @ 3:56PM
prpete1967 said...
Toyota is superior because of reliabilty and gas mileage. GM could have built a Prius but didn't. What does GM have that competes with the Sienna Van? Nothing when you consider they are getting out of the Mini-Van market because of the superior mini-vans by Toyota and Honda.
GM focused to much on building large SUVs including the big polluter, the Hummer. Look at what the Hummer says about a company and what the Prius says about a company in relationship to global warming.
Richard Peterson
4-11-2007 @ 11:37AM
T-DAWG said...
Folks just need to understand what's happening and just accept it. I'm sure GM was a strong competitor at one time. But that fact of the matter is GM
expanded too quickly and quality went out the door. I have a Silverado and I love the truck, but the cars like the Lumina, Regal, and Impala are all crap because I've owned every one of these cars. The Impala was cool in terms of performance, but the repairs on it were too much. I bought my son a little Toyota Tercel as a first car, and I tell you this thing is a strong runner. The car has about 290XXX miles on it and still running strong with only a couple of tune ups, timing belt, water pump changes...you know, the normal stuff. All my GM cars did not make it to a 140,000 miles and I thought that was normal.
My wife and I now own a 2006 Toyota Prius and I just love that thing. What the heck is wrong with GM??? Why aren't they following the current trend??? They want to stick with gas guzzlers and high emission trucks during a time of (high gas prices and global warming)?? It's no wonder people have shifted over to Japanese vehicles... At this rate, it will take the US automakers a very long time to bounce back and the sad part is that it is now a fact that one of them (US automaker) probably wont bounce back at all...
4-16-2007 @ 1:05PM
Fran Preve said...
Bret, take a pill for god's sake. Your illiterate anyway.
T-dawg, if you bought your son a Tecel you did it 20 years ago. Be thankful you don't live in the northa where they salt the roads, Tercels lasted 5 years before rusting to piece. And do me a favor?. Try trading you Prius in on a new car, see what you get for it. They're discounting them for a reason. And do me a favor, trade your Silverado in on a Tundra, leave GM and and never come back. Your just plain ignorant.
GM went thru a period of stupidity, they do this regularly. Then they have to TRY and get the buyers thay lost back. The fact is, for the last 3 years, and for the foreseeable future, GM is doing better than Toyota, in overall quality, and in "wannahaveit". Toyota's recall are going up, and getting bigger. GM's are going down, and getting smaller (ask your Toyota dealer why THEY haven't got a 5 year/100,000 mile warrentee). GM is coming out with more AFFORDABLE hybrids, ours will go head to head with Toyota's dollar for dollar.
Toyota has to discount their new Tundra it's such a hot seller, fact is, Silverado Vs Tundra, Silverado wins in every way. AMerican truck buyers see this, and finally the magazines are giving it to Silverado too.
Saturn Aura (and the coming new 2008 Malibu) beat Camery in dollar for dollar value. And so on and on. Thanks to GM's engineers FINALLY giving UAW workers something to work with!.
Finally, if Toyota's workers make so much less money, and Toyota's "legacy" costs are so much lower, and their workers are so much more productive, then why do Toyota's model for model against Chevrolet's cost MORE?.
Toyota ranters are SO stupid!.
4-17-2007 @ 5:01AM
brettze said...
fran pisshead
GM is not making money do you understand but I do not think you do or want to. Everyone knows that by noww! you thought you could get away with your silly dog and pony show!!!! you silly UAW chump!!!
4-17-2007 @ 5:05AM
brettze said...
UAW and the DOG & PONY SHOW WILL OPEN SATURDAY APRIL 21ST IN DETROIT . KIRK KERKPOVARIN WILL BE THE HOST AT MGM HOTEL / CASINO IN DETROIT. BOOTLICKERS ARE WELCOME.
4-17-2007 @ 5:16AM
brettze said...
UAW and the DOG & PONY SHOW WILL OPEN SATURDAY APRIL 21ST IN DETROIT . KIRK KERKPOVARIN WILL BE THE HOST AT MGM HOTEL / CASINO IN DETROIT. BOOTLICKERS ARE WELCOME.
4-17-2007 @ 5:29AM
brettze said...
ANY STOCK I APPROACH THAT DOESNT MAKE MONEY BUT SING MAIN STREET CRAP WILL BE SHOWN OUT THE DOORS AND DOWN THE STEPS INTO THE GUTTERS1!! MORE AND MORE STOCKS ARE GIVING MORE AND MORE MONEY TO THE SO CALLED ASSOCIATES . SHAREHOLDERS ARE BEING SHAFTED!!! I SAY HEY WHAT ABOUT THE REITREMENT PLANS OF SHAREHOLDERS???? YOU MEAN ONLY FOR YOUR ASSOCIATES NOT YOUR SHAREHODLERS?? ARE YOU KIDDING? YOU OUGHT TO OWE US AN EXPLANATION. WE WOULD GLADLY DUMP STOCKS AND MOVE TO CDs instead!!! WE WILL SEE IF YOU COULD DO WITHOUT SHAREHOLDERS BUGGING YOU AND YOUR ASSOCIATES!!!
4-20-2007 @ 11:39AM
Mitchell Nguyen said...
Read consumer reports... Toyota wins
4-21-2007 @ 9:37AM
paulv said...
Toyota tries to make themselves look like an american company. However, they only employ about 36,000 people in the US, mostly in the southeast. The average Toyota employee earns $9.00 per hour. Employee medical is cost share and retirement comes from employee 401k investments. At that low wage, do you actually believe many of those workers are actually investing for their retirement? The Toyota workforce is also very young compared to GM's workforce. The medical and financial problems our nation will face as the Toyota workforce starts to retire, at a time when our social security system is already strained, will be enormous. Of course, Toyota will probably close those factories and build new ones several hundred miles away when the workforce starts to age. Imagine being in your mid forties, kids in high school, and your 20 year job moving away, just as you start to have some age related medical problems. That's ok, the already overtaxed medicaid system will take care of you. All Toyota profits return to Japan, not the US, benefitting the Japanese, not Americans. Our moronic elected officials and their free trade ideas fail to recognize that our domestic companies are not able to compete on a level playing field. GM provides for over a million people through wages, pensions, and medical benefits. After 9-11, GM donated over a million dollars along with equipment to help the recovery efforts. Toyota gave nothing. In regards to the quality debate, it's clear that GM vehicles are on par or better than Toyota. Consumer Reports was referenced in an earlier comment. In my opinion CR is a worthless, flawed magazine. The CR staff is clearly biased towards Japanese vehicles. Just read their articles closely and you will pick up on how they praise features on Jap cars that they criticize on US cars. As far as their reliability statistics go, their pool is skewed towards Japanese vehicles. They only use input from readers who drank the CR kool-aid and wouldn't say s#%t about their Jap car if they had a mouthful.
GM is an American company, totally committed to a strong and vital America. Toyota is only a participant in the American economy, content with draining our resources and ready to leave when the going gets rough. In a bacon and egg breakfast, the chicken is a participant but the pig is committed. Oh, anyone remember Pearl Harbor?
4-22-2007 @ 11:31PM
Evan said...
If you fly the American flag, then buy an American car.
4-23-2007 @ 2:09AM
quinn said...
i have been working as a valet for 2 years now driving hundreds of cars every weekend. i can tell you that gm's quality does not compare to toyota. 5 year and older gm's squeak, rattle, have electrical problems, and feel like they're about to break down. even the cadillacs. the $15k cavalier has the same electronics/switches as the $50k cadillac. i can drive a 10 yr. old camry or lexus with 150k miles and it still runs strong, everything works properly and it feels no where near its age. unless you drive a wide variety of cars owned by a wide variety of ppl. you can't say GM's cars are good quality! i will admit quality is getting better but still not as good as ford and both still have a long way to go! get out there and drive them like i do and get back to me. im sure you'll get the same results!
4-24-2007 @ 1:51PM
Caryn said...
I'm glad to see Toyota is up in the rankings. Sad to see that Ford is too. I owned a Ford product for 7 years and they turned their back on me and could care less about customer service! See my story posted at: http://blog.vehiclevoice.com/auto_news_reviews/what_were_they_thinking/
The Ford Motor Company is killing the American dream. It's time for them to be shut down and pulled off the top sellers list! People need to realize that American made cars are not really American made anymore. Hence all the problems! i.e. Only 1% of Pontiac parts are made in the USA. Crazy huh? So-called foreign cars are starting to be made more and more in the USA. i.e. Hyundai just built a huge plant in Alabama.
4-24-2007 @ 10:38PM
Ryan said...
GM is the worst car company. The reason that GM is in a slump and Toyota is forging ahead is GM itself. They sell the same crap in all their vehicles year after year. They never improve their cars unless the market forces them to. Name one GM innovation. Airbags? Germans. ABS? Germans. Variable Valve Timing? Germans. The Germans have been creating new technology for years but the reliability and low cost of ownership was not always there. The Japanese copied all these innovations and married them with reliability and in most cases, very low operating costs. I have an Acura Integra with 400,000 kms. That car is still running well. That car has suffered (and still does suffer)many Canadian winters. How many 1990, 4 cylinder cars from GM are running with that mileage with everything working. I mean everything. The sunroof, the AC, the power windows, etc..... That car starts in minus 30 degree Celcius without the block heater. It is funny, I can afford a better car but if I scan my options, what could be better? The operating costs after all these years and miles are fuel, insurance and oil changes... GM Sucks and deserves to fall.
4-25-2007 @ 8:44PM
Michel said...
paulv that is a lie. According to snopes, "Their page about Toyota's Contributions to the Relief Effort details a $1 million donation to the American Red Cross and a program to match similar employee contributions." http://www.snopes.com/rumors/cars.htm Just because they don't brag about it doesnt mean they dont donate.