Toyota closes gap with GM

Toyota Motor Corp. built more than 9 million vehicles last year for the first time, narrowing the gap with General Motors Corp., while Honda Motor Co. reclaimed its position as Japan's No. 2 automaker ahead of Nissan Motor Co.

Toyota reported Friday that its output, including production by its Daihatsu and Hino affiliates, rose 9.5 percent in 2006 to 9.02 million vehicles despite a contraction in the Japanese market, which fell to third place globally behind China.

GM produced 9.18 million vehicles worldwide last year, a slight increase from 9.05 million in 2005, and many analysts expect it will fall to second place behind Toyota as early as this year.

Toyota is forecasting sales of 9.34 million vehicles for 2007. It expects to sell 2.68 million in the United States, a 6 percent increase over 2006 levels.

"Things are going very well with Toyota, and it's likely to achieve its target for this year," said Shotaro Noguchi, auto analyst for Mitsubishi UFJ Securities Co. in Tokyo.

Honda reported a 6.6 percent increase in global output to 3.63 million vehicles, reclaiming second place from Nissan.

Nissan overtook Honda in 2004 but fell to third place last year among Japanese automakers after its output declined 7.7 percent to 3.24 million vehicles.

Honda's rising output reflected brisk sales of the Civic compact, particularly in the United States and China.

Strong demand in overseas markets underpinned Japan's leading automakers -- which are struggling in their home market.

Long the world's second-largest auto market, Japan slipped last year to third place behind China.

Chinese car and truck sales surged by more than a third in 2006 to 7.2 million vehicles, while Japan's market shrank to 5.7 million vehicles -- levels last seen in the 1980s, according to a report by investment firm J.P. Morgan.

The real growth segment in Japan is mini-vehicles weighing half as much as ordinary cars. Excluding mini-vehicles, Japan's market totaled 3.7 million units in 2006 after an 18th consecutive monthly decline in December.

"We believe earnings will remain structurally dependent on overseas sales growth in 2007," J.P. Morgan said in the report.