An Insider's Take on How Toyota Dethroned GM to Become the World's Top Carmaker

Toyota reported today that, for the first time, its first quarter worldwide sales have topped those of General Motors. According to the Associated Press, Toyota had a sales lead of almost 5% over GM in the first quarter of 2007, with Toyota selling 2.35 million cars to GM's 2.26 million cars. Certainly, many have predicted that this day would come, and I will put myself among those who are now saying "I told you so" to GM. During my brief time as a GM insider, I saw first-hand how it was only a matter of time before Toyota would overtake GM as the world's top carmaker.

Twelve years ago, I interned at Delphi Chassis System, which was then part of General Motors and is now independent from GM. As a young mechanical engineer who had just finished my junior year of college, I was excited to apply what I had learned in the automotive world. My assignment with Delphi Chassis was to perform various tests on several types of shocks and struts. Even though they were owned by GM, Delphi Chassis designed and produced car parts for not only General Motors' brands such as Pontiac and Chevrolet, but also for outside car producers such as Toyota.

That fact alone would not be of concern. Ford's Visteon unit (now independent of Ford) had a similar arrangement during this time period, so this was not an uncommon practice. What struck me, even as a college intern with no "real" experience in Corporate America, is that there were different quality standards for parts produced for GM cars and those produced for Toyota. The shocks and struts which were manufactured for GM were subject to less stringent quality standards than those which were made for Toyota. This was particularly odd because Delphi Chassis was owned by GM - why would GM want to make "better" parts for their competitor than they made for themselves? When I asked my fellow engineers this question, the answer that I was given was that Toyota demanded parts which met their strict quality criteria, while GM had "different" quality standards. Of course, strict quality standards are more expensive to maintain, which is certainly one reason why GM would apply lesser standards to their parts than they would to Toyota parts.

I only spent three months at Delphi Chassis, in just one small part of the organization, so I can't say for sure that this attitude was throughout the organization. However, from what I saw during my short time as an intern with GM, the higher quality that consumers associated with Toyota's vehicles isn't just a perception - it was a reality. Unfortunately for GM, this discrepancy in quality has caught up with them today as Toyota becomes the top seller of vehicles in the world.

C.M. Paulson is a freelance writer who spent almost 10 years working for two Fortune 100 companies and now specializes in writing for the business and financial fields.

Sources: AP