On May 10 Toyota announced record results for the past year just as GM was announcing further layoffs and plant closures. The Toyota/GM comparison is perhaps the clearest example of the natural advantage of management tuned to business processes as opposed to that driven by financial results. The management philosophy at Toyota has been consistently based on continuous improvement and economic-quality since the 1950s while GM and Ford have over the same period followed varying financially driven philosophies sponsored by the latest CEO. While customer-aligned constancy of purpose has been dominant over the long term in Toyota , Ford and GM have only been guided by shareholders’ short term interests.
Toyota's First Metre advantage as GM faces Last Mile to Chapter 11 (21 May 2006)
The numbers are simple. Look at the big three auto companies : Toyota, Ford and General Motors. Their market capitalisations are $178B, $13B and $14B respectively. Their gross margins on a trailing twelve month basis stand at 19.5% for Toyota; 6.2% for Ford and 1.6% for GM. That other significant Japenese giant (with one third the market cap of Toyota) in this arena – Honda – actually beats Toyota with 29.2%.
If the summary earnings measure of EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) is used as the reference Toyota stands ahead of the crowd at $29.1B, with Ford at $12.2B, GM at $6.8B and Honda at $9.8B.