Volkswagen Threatens To Unseat Toyota as No. 1

Jan 26, 2015 06:00 PM EST | Jordan Ecarma

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The world's biggest automaker could lose its No. 1 title after falling behind in the world's biggest auto market--Toyota is under threat from Volkswagen as the latter grows in China.

The numbers look close so far: Toyota has forecast that its global deliveries will fall 1 percent this year to 10.15 million vehicles, according to Bloomberg. That would be only 10,000 units ahead of Volkswagen, which expects to boost production in China to more than 4 million vehicles by 2018.

"The difference is that Volkswagen has a jet engine strapped to its back called 'China'," Bill Russo of Gao Feng Advisory Co. told Bloomberg. "Toyota, unfortunately, is in a position of weakness when it comes to the China market. It would be almost impossible to hold on to a No. 1 position without being in the lead in China, and Toyota's not even in that league."

While its sales may be lagging, Toyota tops Volkswagen when it comes to profit. Toyota brought in an estimated $16.7 billion in 2014, while Volkswagen earned around $12.4 billion.

Coming in at sixth place in China sales, the Aichi, Japan-based automaker hasn't established a manufacturing plant in the country since 2012. General Motors plans to build five new China plants by 2018, the same year that Volkswagen expects to grow to 4 million vehicles produced in China compared with 3.1 million in 2013.

"Their focus is not No. 1," Peggy Furusaka, an auto-credit analyst for Moody's Investors Service who is based in Tokyo, told Bloomberg. "Toyota is more concerned about keeping profitability than chasing numbers. So for coming years, I wouldn't be surprised to see Toyota selling fewer cars than Volkswagen."

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