General Motors Chairman and CEO Rick Wagoner told senior executives that the company hasn't given up the fight despite being outpaced by Toyota in global sales in the first quarter of the year.
"We still have the majority of the year in front of us, and we will fight hard for every sale -- all the while staying focused on our long-term goals as a global, growing company," Wagoner told high-level company officials in an email Tuesday shortly after Toyota's sales numbers were released.
Wagoner said GM was surpassed by Toyota largely because of its move to reduce unprofitable sales to fleet customers and the fact that the Toyota crushes GM in sales in Japan.
"Like many of you, I woke up to news reports today of Toyota passing GM in global sales in the first quarter this year, for the first time ever," Wagoner said in the email obtained by The Detroit News. "I didn't welcome this morning's news, and I know you didn't either. But what's important is that we stay focused on implementing our business strategies around the globe, because they are working."
Officials within the company are trying to emphasize profitability over sales.
A strategy of reducing fleet sales "cost us about 70,000 units in lower daily rental sales in the U.S. and Canada in the first quarter this year… nearly the entire amount of our global sales gap versus Toyota. But it was the right thing to do. Our sales and marketing strategy requires patience, but it's working, and we need to stick with it," Wagoner wrote.
Reached Wednesday, GM Vice Chairman Bob Lutz offered a curt response to Toyota's outpacing GM for the first three months of the year: "My reaction is 'So what?'"
GM has been the worldwide leader in auto sales since 1931, when it surpassed Ford Motor Co.
GM sold 9.1 million vehicles in 2006 worldwide, down from 9.17 million in 2005, reporting a net loss of $2 billion, narrowing its $10.4 billion loss in 2005.
Toyota sold 8.8 million vehicles in 2006, up 8 percent and earned more than $11 billion in its last fiscal year. The company said it expects to sell 9.34 million vehicles this year. GM hasn't disclosed what it expects to sell.
In his e-mail, Wagoner noted that GM outsells Toyota in 12 of the 15 top auto markets worldwide, and still outsold Toyota by 1.5 million units in the United States in 2006.
"One question is where did Toyota pass us in sales? Basically, Toyota beats us badly in their home market of Japan (by 2.4 million units on an annual basis), and we win in most other markets," he wrote.
He also noted that GM is "staying focused on further reducing our still huge health care cost disadvantage versus Toyota and other non-U.S. based manufacturers."
On Wednesday, Toyota stepped up its lobbying efforts in Washington, emphasizing its investment in the U.S. at a time when some company officials are fearing a backlash.
Some 100 U.S. Toyota employees -- including assistant regional managers, plant executives and financial executives -- fanned out on Capitol Hill to take part in a prescheduled "grassroots lobbying effort," spokeswoman Martha Voss said.
"They are here to touch base and say, 'We're here, we're from your district. Here's what kind of jobs and investments we have,'" Voss said, adding the timing had nothing to do with the sales milestone.
Toyota's lobbying efforts haven't gone unnoticed.
"They outspend us," Lutz told reporters in January, "It is my considered opinion that Toyota has more clout in Washington than we do."
At the same time, an issue domestic automakers have been complaining loudly about is the value of the Japanese yen.
President Bush is set to meet with Japanese Prime Minister Shinzo Abe on Thursday and Friday.
Automakers argue Japanese currency "manipulation" unfairly gives Toyota, Honda and Nissan up to a $4,000 per vehicle subsidy, by making American cars more expensive in Japan and Japanese imports less expensive here. Japan and Japanese automakers reject the charge.
Two-thirds of the U.S. $88 billion trade deficit with Japan is auto related.
Last month, U.S. Sen. Debbie Stabenow, D-Lansing, introduced a bill dubbed the Japanese Currency Manipulation Act, which would force the Japanese government "to take action to stop subsidizing millions of auto exports to the U.S. by bringing its currency into proper alignment with the U.S. dollar," said a statement from the Automotive Trade Policy Council, a group representing GM, Ford and DaimlerChrysler AG.
The group says the subsidy provides a windfall that ranges up to "$10,000 per vehicle for higher-end Japanese imported SUVs such as those sold by Toyota under the Lexus brand."
National Security Council spokesman Dave McCormick defended the administration's approach and said Wednesday that "we look to have open markets in all areas, and are focused on continuing to find ways for Japan to open up its markets, particularly for foreign investment in the automotive sector."
He noted that "automotive makers have met with the President on this issue and, generally, we think it is (fair)," adding that the issue of Japanese currency rates may come up.