Hell freezes over: GM fades to No. 2

By Peter M. De Lorenzo

Peter M. De Lorenzo is founder and editor of Autoextremist.com.

What was unthinkable not too many years ago has finally happened -- Toyota is now the No. 1 automobile company in the world, surpassing General Motors in sales in the first quarter of this year. Toyota announced Tuesday that it had sold 2.348 million vehicles worldwide in the January-March quarter, surpassing the 2.26 million vehicles GM sold during the same period. Yes, it's only one quarter, but the momentum has been building for years now, and I don't expect Toyota to lose its lead anytime soon.

To a lot of people here in Detroit, it's a sad day. And not just for GM old-timers, either. General Motors wasn't just the largest U.S. automaker, it was the largest business enterprise in the world, a glittering showcase of American industrial might that mirrored the upward trajectory of this country in the blue sky '50s and go-go '60s. GM was a source of pride for Detroiters of all stripes, because along with Ford and Chrysler, the center of the automotive universe was right here in the Motor City -- and we liked it that way.

GM's heyday was a time when giants roamed the earth -- with larger-than-life characters flaunting larger-than-life egos running the most dominant industrial enterprise in the world. Back in the day, it was often said that a divisional general manager for GM had more power than some heads of small countries. And it was true. GM dictated to the market in terms of design, engineering, vehicle content, pricing, segments -- even down to the paint colors offered.

GM was the New York Yankees of the auto business with the best players, the top salaries and profit championships won, year after year. GM was so dominant at one point that there was actually talk in Congress of "breaking up" the company when its sales approached 48% of the U.S. market. Now? GM is clinging to a 24%-25% share of the U.S. market, with clinging being the operative word.

A corner never turned

GM's long slow slide to second-tier status and Toyota's meteoric rise to the top went hand in hand. While GM continued to bask in the arrogance that came with being the most dominant player in the automotive world, it became complacent and mired in yester-think -- which went perfectly with its obsolete organizational structure and burdensome divisional lineup -- and the mediocre, yester-tech cars and trucks that they unloaded on the American landscape beginning in the late 70s and that continued all the way to the mid '90s.

Meanwhile, Toyota never wavered from its path of focused consistency, with each product offered better than the previous one, each bristling with a level of durability, quality and reliability that was light years beyond anything GM and the rest of what was formerly (and now quaintly) known as the Big Three was offering. And along with building better cars and trucks, Toyota built its dealer network from the ground up, too, offering up high-caliber, enthusiastic dealers who weren't stuck in the past and who were hellbent on pushing Toyota to the top.

And when the inevitable criticism of Toyota and the other Asian manufacturers became the hot topic in Detroit and Washington, with Detroit's market share slipping and jobs being impacted, and the cry came from auto executives and sympathetic legislators to "let them build factories over here and we'll see how they do" -- they proceeded to do exactly that. And while Toyota (and Honda) were building sparkling new factories in regions of the country free of the crushing costs associated with union labor contracts, GM and the other Detroit automakers were collectively crafting the most egregiously overinflated and overwrought labor contracts in history with the United Auto Workers union -- which ultimately led the domestic automakers to the brink of oblivion in just 20 years.

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