Ford, GM, and...Toyota?

The all-American ranks of the Big Three have already been breached once, when Germany's Daimler-Benz took over Chrysler Corp. in 1998. Now, Detroit is bracing for the possibility that a Japanese auto maker may burst into the dominant threesome. With a new stable of popular trucks and SUVs, Toyota has been quickly gaining share, leading to speculation it might soon overtake struggling Chrysler as the nation's third-largest carmaker.

The numbers tell the story. Toyota (TM ) has been growing steadily--its share is up two full points since 1997 and stood at 10.1% through November last year. Chrysler (DCX ) maintains a lead--at 13.3%--but its slice of the pie has narrowed by almost three points since the merger. For Christopher W. Cedergren, auto analyst at Nextrend Inc. in Thousand Oaks, Calif., these trends suggest that Toyota's ascendance is not just possible but maybe even likely. As a group, Asian auto makers are expected to pick up another two points of market share this year--to 32%--as their U.S. rivals, particularly Ford (F ) and Chrysler, continue to struggle financially. "There's just nothing out there to stop Japan's momentum," says Cedergren.

Toyota is definitely on a roll, thanks to its expanding lineup, a reputation for quality, and solid, if unexciting, design. For families, there's the best-selling Camry, which was redesigned for 2002--to rave reviews. In February, the Matrix, a funky new sport wagon aimed at the youth market, will go on sale. Toyota's Lexus division, which already rules the luxury market, will add another midsize SUV, the GX470, to its lineup about a year from now. And later this year, Toyota will unveil a third brand that it hopes will attract younger buyers. AutoPacific Group Inc. analyst James Hall thinks Toyota's new products will lead to big market-share gains: "If Toyota doesn't pick up share, something's wrong." Still, Toyota probably won't nab the No. 3 spot in 2002 unless Chrysler stumbles badly. But as the 0% financing craze that boosted domestic auto makers last fall peters out, one thing is certain: The momentum in Motown clearly lies with the foreign carmakers.

By Joann Muller in Detroit

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