11.8.2007 9:29 AM

GM Reports Record Loss, Toyota a Record Gain

Yes, Fuel Efficiency Matters

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By Dan Shapley

In the green world, Toyota has become synonymous with fuel efficiency and innovation (even though it opposes new U.S. fuel mileage standards), and General Motors has become synonymous with big, polluting trucks and SUVs.

It would be easy, then, to point to the record losses at GM — a $39 billion quarterly loss — and record revenue at Toyota — $43.1 billion — as a sign that the world had reached a tipping point in demand for fuel-efficient vehicles.

But that's only partially true.

There are three factors, according to USA Today, that explain the divergent profitability of the two companies:

With oil and gas prices at or near record highs, Toyota has a better mix of vehicles for sale, including more cars and fewer trucks. That makes its brands more appealing to consumers concerned about the cost of filling the tank, but doesn't necessarily mean it's the hybrid Prius that's dominating the market.
GM has supported its workers with family-style health and retirement benefits, making its overhead costs much higher than Toyota's.
The weak dollar means that imports have a $4,000 advantage over models produced domestically.

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