Toyota to Go Full Steam


Auto major Toyota (NYS: TM) will step on the gas with normal production resuming in North America in September. Let's see where the company stands amid the competition.

Back to normal
General Motors
(NYS: GM) has overtaken Toyota as the world's No. 1 automaker on the basis of the first six months of sales, but not on its own merit. The March earthquake and tsunami in Japan disrupted production for Toyota, which had sold 8.4 million units in 2010. Now with production in full swing in its North American plants, GM must be on tenterhooks.

Toyota rolls out 12 cars, crossovers, and trucks in North America, which include Camry, RAV4, and Tacoma. These account for a sizable portion of the automaker's U.S. sales. Toyota operates 13 plants in North America and another one is under construction. The company also plans to expand its U.S. output of small engines. In Japan, the automaker posted an increase in production for the first time in 12 months after the March catastrophe. It is also planning to invest $545 million to upgrade its plants in Ontario, Canada. Things can only look up from here on.

The company, like its competitor Honda (NYS: HMC) , is now on a hiring spree across North America, which will help production keep pace with demand. Honda recently hired 1,000 workers at one Indiana plant alone as the Japanese company also returned to full production in September.

The challenges
U.S. auto sales forecasts are being lowered for 2011 and 2012. However, production outlook for 2011 is still higher than 2010. North American production has gone up by 8% in the first seven months, matching the growth in U.S. production.

General Motors and Ford (NYS: F) have eaten into the market share of Toyota. However, with Toyota, the former market leader, re-entering the market in full force, the rivals are in for some tough competition.

The Foolish bottom line
Toyota, which enjoys a strong position globally and in the U.S., is getting its capacity back on track and is poised to produce a surge in sales. In this year's fourth quarter, the company hopes to make up a significant amount of the U.S. market share it lost despite strong competition from Ford and GM. If it can, watch out for this sleeping giant in the coming months.

Abantika Chatterjee doesn't own shares of any company mentioned.The Motley Fool owns shares of Ford Motor.Motley Fool newsletter serviceshave recommended buying shares of General Motors and Ford Motor. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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