Global Themes

On Globalization & Venture Capital

“The Pain of Second Place” – excerpts

In the Feb 12, ’07 issue of Forbes, came across this piece by Jerry Flint: “The Pain of Second Place” – very readable…  

It has this graph that shows the staggering and relentless growth of Toyota over the past 30 years which will culminate this year in its finally overtaking Ford as the world’s largest manufacturer of autos.

 toyota-gm-comparison.gif

Some excerpts from the story:

“The General Motors era is over. This year Toyota will overtake General Motors as the world’s largest manufacturer of autos, selling something more than nine million vehicles, probably half a million more than GM. This seems certain. It is even plausible that in, say, 2011, when Toyota has built more factories and hired more dealers as GM sales keep falling, the Japanese Godzilla will outsell GM in the U.S. I am not predicting this, just saying it’s possible with present trends.

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The psychological effect of GM’s fall to the number two position will be enormous. Sure, there is maybe one good side to it. People will stop blaming General Motors for everything that goes wrong in the world. The company won’t be blamed for destroying the air we breathe, for not doing enough for safety or diversity, for not saving the polar bears. People don’t pick on the second-ranked guy. 

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…At first GM will try to prove that it hasn’t lost. We call that denial. When GM ruled, it led in technology, inventing or popularizing the automatic transmission, the high-compression engine, the collapsible steering wheel, the catalytic converter — and those great designs…

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But this preeminence has been fading for decades. GM puts four-speed transmissions into its big Cadillac when Toyota has an eight-speed in its biggest Lexus. We all know about those hybrid Priuses. And when it comes to engines, GM still is catching up to the newer overhead-cam designs pushed by the Japanese. We may not understand what overhead cam means, but we buy them.

…GM people will come up with new cars that they dream will retake the leadership. I call that desperation. There’s the new Chevrolet Malibu, shown at the Detroit auto show and due out later this year. I’m sure it’s very good. But to think it could top Toyota’s entry in this category, the bestselling Camry, fits nicely into the desperation category.

This doesn’t mean the end of General Motors. Outgunned armies can still fight, hold ground and win battles. But it’s not the same as being number one. They don’t win the war.

GM was on top for three-quarters of a century, and that’s impressive. Toyota won’t do that. The world moves faster now. In 15 years maybe the Koreans (Hyundai) or the Chinese (Shanghai Auto) will overtake it.

I might be wrong about GM never regaining the leadership…

History doesn’t have to repeat itself, and General Motors 2007 is not Ford Motor 1929. The battle is not always to the strongest–but the bookies say it’s still the way to bet.”

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You can read the full story at www.forbes.com/execpicks/forbes/2007/0212/044.html

February 20th, 2007 Posted by | Global Competition, Japan, USA and Asia | no comments

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