GM shrinks sales gap with No.1 Toyota after firm Q2

By Jui Chakravorty and Chang-Ran Kim

DETROIT/TOKYO (Reuters) - General Motors Corp. narrowed the gap with top seller Toyota Motor Corp. in the first half of 2007 thanks to a solid second quarter, although demand continued to fall in its home North American market.

Detroit-based GM said on Thursday its global sales in April-June totaled 2.4 million vehicles, up less than 10,000 vehicles from a year earlier. For the first six months, sales rose 1.7 percent to 4.674 million units.

First-half sales were just 42,000 units short of Toyota's tally of 4.716 million units for the first half, down from a difference of 90,000 units in the first quarter.

Toyota's January-June sales were up 8 percent from the year before, a Toyota spokeswoman said.

When stripping out sales at GM's minority-owned Chinese joint venture, SAIC-GM-Wuling, Toyota overtook its U.S. rival as the world's biggest automaker in 2006 as it grabbed market share on GM's home turf. GM had held the No.1 spot for 75 years.

Toyota's sales number includes those at Daihatsu Motor Co. and Hino Motors Ltd., in which it holds majority stakes.

GM's second-quarter sales in North America, its largest region by volume, fell 7 percent, hurt by high gasoline prices, a weak housing market and a planned reduction in daily rental sales. Outside the United States, sales totaled 1.39 million vehicles, accounting for 58 percent of total sales.

Sales in every other region rose. GM's chief sales analyst, Paul Ballew, said on a conference call that the automaker expects to see sales outside the United States rise by 400,000 to 500,000 units this year.

GM, which has been struggling in the United States -- its largest and historically most profitable market -- has been growing overseas as it loses market share to Japanese competitors at home.


Even by GM's count, Toyota is almost certain to take the lead for all of 2007 after it projected global sales of 9.34 million units against GM's forecast for 9.2 million.

After losing more than $10 billion in the past two years, GM is in the middle of a restructuring of its North American operations that includes slashing more than 34,000 jobs and closing 12 plants.

"We anticipate (the U.S.) will still be the most profitable market in the decade ahead," Ballew said on the call. "It's really key not to be excessively dependent on the U.S., but you still need to be successful in the U.S."

Ballew said GM should begin seeing a recovery in U.S. in 2008.

He also said it was too early to comment on July industry sales, but he expected them to be stronger than June's. U.S. auto sales fell 3 percent in June, with GM's U.S. sales down 8 percent that month.

Sales in Latin America, Africa and the Middle East rose 20 percent, driven a 23-percent rise in Brazil alone. GM on Wednesday said it would invest $500 million in Brazil and Argentina to develop smaller vehicles for Latin America and other emerging markets.

In the Asia/Pacific region, GM sales rose 8 percent, driven by big gains in China. GM said it is on track to become the first automaker to exceed annual sales of 1 million vehicles in China.

Sales rose 5 percent in Europe, driven by a 106 percent rise in Russia.

Global industry auto sales are on pace to reach a record 70 million units this year, Ballew said.

When stripping out sales at GM's minority-owned Chinese joint venture, SAIC-GM-Wuling, Toyota overtook its U.S. rival as the world's biggest automaker in 2006 as it grabbed market share on GM's home turf. GM had held the No.1 spot for 75 years.