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Toyota Is Back, but Can It Stay on Top?

Monday, 26 Nov 2012 | 11:56 AM ET
Toyota Venza
Source: Toyota.com
Toyota Venza

Heading into this year's Los Angeles Auto Show Toyota finds itself in a familiar position:

  • it's poised to eclipse GM as the world's largest automaker this year
  • in the U.S., it has gained more market share (up 1.8%) than any other automaker
  • and Toyota has shored up its biggest weakness the last four years: quality

In short, Toyota finds itself close to where it was back in 2009 when it stumbled badly.

At the time, new CEO Akio Toyota publicly proclaimed his company would focus more on quality and less on growth. Three years later the growth has come back, in part because the quality has as well.

Few in the auto industry are surprised, but the question now is whether Toyota can stay on top of its game. On that topic analysts, consultants, and executives in the industry are split.

Most agree Toyota's renewed focus on quality (the brand was tops in the latest initial quality report, with Lexus also in the top five) will keep the Japanese automaker from having major recalls of the magnitude we saw in '09 and '10. Toyota's commitment to better quality is a sincere effort.

Where most disagree is whether Toyota can stay on top in terms of sales. Globally, Volkswagen is charging hard—especially in China where Toyota has issues relating to China/Japan relations. And here in the U.S. many believe Toyota's gains are close to a limit.

The competition from refreshed GM, Ford and Honda models will make it tough for Toyota to surge past Ford into 2nd place. If the economy perks up, so will truck sales and Ford should further strengthen its 15.5% market share.

There's no doubt Toyota is back. The question is whether this time Toyota can stay on top of its game.

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Questions? Comments? BehindTheWheel@cnbc.com and Follow me on Twitter @LeBeauCarNews

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  • Phil LeBeau is a CNBC auto and airline industry reporter based in the Chicago bureau and editor of the Behind the Wheel section on CNBC.com.

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