It flies in the face of what most observers are seeing in the economy, but Toyota (NYSE:TM) sees North American car demand in 2008 as about the same as it was last year. That would be about 16 million vehicles. The Japanese company believes the market will be OK because sales of fuel-efficient cars will rise.

"I believe U.S. economic fundamentals are strong," Toyota President Katsuaki Watanabe told reporters according to Reuters.

While Toyota may be right about the shift from SUVs and other large vehicles to smaller sedans, the forecast appears to lack a basic understanding of what is going on in the US right now. Many potential car buyers simply do not have the resources to get a new car. They are having too much trouble with basic expenses like fuel and housing.

Toyota has beat the odds before, but this does not look like one of those times.

Douglas A. McIntyre is an editor at 247wallst.com.

Toyota's (NYSE: TM) net grew 7.5% in the last quarter, but it indicated that it may not be quite so fortunate in the current period.

According to Reuters, the improvement was due to "speedy sales growth in China, Russia and other emerging markets." The big car company said it was still worried about the US economy.

The figures from the Japanese company show the difficulties that all of the global automotive firms face now. They are seeing double-digit sales increases in emerging markets, but in their largest market, the US, sales could be extremely poor this year.

Even that analysis masks the real long-term threat to Toyota's growth. In most emerging markets, there are already large automotive firms. Those include Shanghai Automotive in China and Tata Motors (NYSE: TTM) in India. These companies are not going to let big overseas operators simply come into their countries and take large pieces of the market.

The US economy may be the short-term enemy to Toyota, but competition in emerging markets is likely to be its challenge for the next decade.

Douglas A. McIntyre is an editor at 247wallst.com.

General Motors Corp.'s (NYSE: GM) first quarter results may not be as bad as they look, even though they are horrendous.

The company missed Wall Street forecasts largely because of losses its former financial business incurred in the suprime mortgage market. Net income was $62 million, or 11 cents per share, compared with $602 million, or $1.06 a year earlier. Revenue fell 16% to $43.9 billion. Excluding one-time items, profit was 17 cents per share. Analysts had expected profit of 87 cents on revenue of $40.9 billion, according to Thomson Financial.

Nonetheless, the automotive business had a $272 million profit, down from $295 million, helped by the cost-cutting undertaken by Chief Executive Rick Wagoner. Profit in the automotive segment on an adjusted basis was $304 million, up from $40 million.

So far, investors have indicated that they believe GM's challenges are more daunting than its rivals. The automaker's shares have lagged both Ford Motor Co. (NYSE: F) and DaimlerChrylser AG (NYSE: DCX).

But has the market unfairly penalized GM? Is all of the bad news priced into GM's stock?

Anyone looking for a true contrarian bet should consider buying the shares. Remember people don't get rich following the crowd.

General Motors Corporation (NYSE:GM) is boasting that its sales in China will grow 15% next year, slightly faster than the overall growth rate in the Asian country. Great.

But GM's sales in China grew over 37% in the first nine months of 2006, so the projection would appear to be a significant slowing. GM sold over 645,000 vehicles in China during that period.

None of this will matter if GM cannot improve operations in North America, where the competition is getting stronger everyday. Toyota Motor Corporation (ADR) (NYSE:TM) is about to see what it can do to the largest US car company's core product line, pick-ups. Toyota is investing $1.2 billion in a new plant in Texas to build its Tundra pick-up.

Car industry analysts see Toyota's move as a way to pressure margins in the key pick-up segment. Pick-ups not only have large sales volumes, they also are highly profitable.

GM can do what it wants in China. Its largest rival is coming from Japan to eat its lunch in the US.

Douglas McIntyre is a partner at 24/7 Wall St.