IN OTHER WORDS: Lesson
It was a bit of a shock when Toyota finally surpassed General Motors last week as the world’s largest carmaker. Outside of disruptions caused by labour strikes, GM had led the pack for over 75 years. While hardly a cause for celebration in the American business community, Toyota’s assumption of the crown — after selling 2.35 million cars and trucks in its most recent quarter — is not as bad as it appears.
The US economy is still the largest in the world, but young markets in places like India and China make clear that it will not stay that way forever. There will be ever more competitors from all over, ready to knock off those in the old guard if they make the wrong choices. This is no reason for American business to despair; instead, it has to refocus on how to stay competitive in a world beyond US dominance. Germany’s recent success might serve as a model. Germany’s success was not accomplished painlessly.
There were wrenching layoffs and rounds of cost cutting and outsourcing along the way. General Motors faces a particular set of challenges because in the mass-market automobile game, the huge upfront costs of designing and building cars make sales volume crucial. But Germany’s export prowess proves that for a smart industrialised country, many small successes can add up to No. 1.