GM Shares Fall to 18-Year-Low After Toyota Forecast

Shares of General Motors Corp. (GM) fell to an 18-year low Tuesday after Toyota Motor Corp. (TM) unveiled production plans for 2006 that increased fears that it will topple GM as the world's largest automaker.

Toyota said it plans to make a record 9.06 million cars in 2006, just shy of the 9.15 million cars and trucks that some analysts expect GM to build next year.

Shares of GM were down 88 cents, or 4.2 percent, at $20.16 on the New York Stock Exchange. The stock fell more than 5 percent to $19.63 earlier in the day, its lowest point since 1987. Shares have plunged nearly 50 percent this year.

Toyota Motor Corp., Japan's top automaker, has been growing at a time when General Motors Corp. has been stumbling, losing $1.6 billion in the third quarter and seeing its market share in North America chipped away by Asian automakers, including Toyota.

Toyota's production target, announced by President Katsuaki Watanabe at a news conference in Nagoya, central Japan, marks a 10 percent increase from the 8.25 million vehicles Toyota expects to produce this year.

Like Toyota, other Japanese automakers, including Honda Motor Co. and Nissan Motor Co., are also in good health.

Honda said Tuesday in Tokyo that it projects global sales in 2005 will have risen 5 percent from a year earlier to a record 3.35 million vehicles, while vehicle production worldwide will have gone up 7.2 percent from last year to 3.41 million cars.

Toyota said it expects to sell 8.85 million vehicles worldwide next year, up 9 percent from 8.09 million estimated for this year.

When not including its subsidiary automakers Hino and Daihatsu, Toyota plans to produce 8.11 million vehicles next year, up 10 percent from 7.37 million vehicles in 2005.

GM does not provide sales or production forecasts on an annual basis, but some analysts said the current trend points to GM's inevitable tumble to second place for the first time in 70 years.

"Toyota will probably be the largest producer in the world at the end of 2006," said Richard Hilgert, auto analyst at Fitch Ratings, citing GM's slumping sales of large sport utility vehicles in the fuel-conscious market.

Burnham Securities analyst David Healy expects GM to produce 9.15 million vehicles in 2006, and expects Toyota to surpass GM as the world's largest automaker in 2007.

Peter Morici, University of Maryland economist and auto industry expert, believes that GM, Ford Motor Co. and the United Auto Workers, the U.S. labor union, do not enjoy much public sympathy, compared to the 1980s.

"I do not believe the U.S. public will support protection for GM. If the government does it, it will have to be veiled," he said.

Detroit-based General Motors has announced drastic cost cuts, including trimming 30,000 jobs, or 27 percent of its North American manufacturing jobs, and the closure of 12 facilities by 2008.

GM's U.S. market share fell to 26.2 percent in the first 10 months of this year compared with 33 percent a decade ago, the result of increasing competition from Asian rivals. Standard & Poor's Ratings Services lowered GM's debt to "junk" status earlier this year.

GM isn't the only U.S. automaker cutting costs.

Ford Motor Co. (F), which reported a third-quarter loss of $284 million, has said it plans to eliminate about 4,000 white-collar jobs in North America early next year as part of a restructuring plan.

Ford Chairman and CEO Bill Ford has said he plans to announce U.S. plant closings and layoffs in January.