Filed under: Products and services, Consumer experience, Competitive strategy, General Motors (GM), Toyota Motor Corp. (TM), Battle of the Brands

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The sad part about this subject is watching these two companies going in almost opposite directions -- at least for now. General Motors General Motors Corp. (NYSE: GM) has a current market capitalization of $18 billion versus the behemoth Toyota Motor Corp. (NYSE: TM) with a massive market capitalization of $236 billion, over 13 times bigger than GM. Yet on the surface one would never guess these numbers as their revenues are fairly close in comparison: GM for 2007, estimates revenues of $173 billion, and Toyota's at $200 billion.

It's what's underneath the hood that distinguishes these companies.

Toyota has just come off a five-year period of growth in its per-share earnings at 26% per year, an astounding accomplishment for such a large company. General Motors has experienced flat to negative earnings per share growth over the same five-year period. Toyota is opening new plants, both in Japan and the U.S., to handle demand, while General Motors is closing plants to save costs and resources.

Toyota has set itself apart as the undisputed world leader with the hybrid auto: half combustible engine, half battery powered. The hybrids are still at a price premium to comparable standard combustible, gasoline-powered models, but they will close that gap over the next two or three years. The hybrids come in luxurious lines of the Camry, the Highlander SUV, and the Lexus RX series, as well as the economical Prius model. GM has yet to enter the hybrid field in a serious way.

The General Motors mantra for 2007/2008 is survive at all costs. Closing plants and dealing with the unions over health-care benefits is the first order of business for GM. The long-term health-care benefits provided to the retirees costs in the billions of dollars per year. GM literally has to downsize itself first before growing the company again.

Toyota on the other hand is on a growth curve, looking at 10% top line and bottom line for the next couple of years, and as the hybrid offerings become more and more mainstream, Toyota's positioning will only get stronger. Toyota appears to be taking over the mantle as the world's largest auto manufacturer from GM. General Motors will serve its employees, shareholders, and customers best by becoming a lean, mean machine.

Toyota has the hot hand and appears poised to keep that going. The biggest factor for Toyota has been acceptance by the American consumer and the success of its anchor-model, the Camry, which is now among the top three cars sold in the United States. The Lexus luxury line of autos and SUVs redefined the model for superior customer service. Toyota realized early on that serving and appreciating the customer -- and letting the customer know that -- would win them a strong loyal base. Toyota does not publish these facts, but many dealers will say that 70 to 75% of Lexus buyers are repeat buyers. That is loyalty!

GM and Toyota were once very comparable in almost all statistics. The pendulum has definitely swung for Toyota and appears it will stay that way for a long, long time.