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Toyota topples GM: what is its secret?

It was a matter of time before Toyota Motor Corporation (ADR) (NYSE: TM) overtook General Motors Corporation (NYSE: GM) as the largest seller of worldwide automobiles. In Q1 of this year, that finally happened, as Toyota sold 2.35 million vehicles in the quarter to GM's 2.26 million. What is so special about Toyota, and why is the automaker selling so many vehicles these days?

In the U.S. marketplace, Toyota doesn't have the overhead costs of GM (pension, health care and other labor costs), so its vehicles can be priced more attractively. Toyota's styling in its passenger car division is widely regarded as miles ahead of the boring and staid GM designs (save Pontiac, which gets it). Combine that with the reputation (however truthful or not) that Toyota vehicles are infinitely more reliable than GM's units and, well, there you go.

Toyota's marketing focus on miles per gallon and its brilliant marketing on alternative-powered and hybrid cars (and SUVs) has won it converts from the green car buyer as well. GM has a rather large E85 effort underway for this same crowd, but the marketing is not there and the campaign lacks panache.

Add all this up together and it's no wonder Toyota finally surpassed GM this past quarter. The question is: can the Japanese automaker keep it up this entire year? GM's back in the hunt and has fixed quite a few things recently. Ford is still floundering a bit but massive changes are happening there as well.

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Last updated: May 27, 2012: 10:23 PM

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