For General Motors, 2008 Put Automaker in Second Place

General Motors has a long and illustrious history, one that began in 1908 with the merger of several auto companies into one entity. For the past 77 years, GM has enjoyed the title of world's largest automaker, but that crown passed to Toyota Motor Corporation last year.

Toyota had been gaining on GM for years as the American automaker's sales numbers stagnated or, as was the case last year, actually fell by several hundred thousand units. Despite selling more cars in China and in the United States than any other car maker, GM couldn't keep their momentum going and actually sold approximately 600,000 fewer units than Toyota in 2008.

Credit should be given to Toyota who has persistently chipped at GM's lead, making bold statements a few year's back that they were poised to overtake GM when they were only selling two-thirds the number of cars as the old number one was then selling. Small, fuel efficient cars are the hallmark of Toyota, but the company has also taken a leadership role in the luxury car segment thanks to its Lexus line. For good measure, Toyota rolled out its youthful Scion division six years ago, another way that the company has been able to increase its visibility which has led to improved sales.

GM has also contributed to Toyota's ascendancy as the company has rarely broken past its record selling pace of 9.5 million vehicles set some thirty years ago. Declining market share at home has led to most of that drop while its inability to conquer established European markets has also taken its toll. Without its strong presence in China, GM's overall fortunes would have been much worse, likely spelling the end of the automaker.

Going forward, GM could rebound and see a sales increase beginning this year. Dogging the company, however, is its precarious financial position, one that could scuttle its recovery effort. Recently, GM announced that they would be consolidating operations and closing down or selling off excess brands, a move that could allow a trimmer GM to become profitable and grab more sales.

Lest anyone think that Toyota is moving forward trouble free, think again. In 2008, Toyota's sales actually dropped, but not as severely as GM's. In addition, the company is poised to report its first operating loss in its 70 year history, not a big drop but enough of a loss to concern Toyota management. Indeed, the Japanese car make recently replaced its CEO with the grandson of the founder of Toyota in a bid to reinvigorate sales.

Though the company is now #2, GM could borrow a phrase from rental car operator, Avis, and tell its customers, “we try harder.” That might work!