Toyota Motor Corporation (ADR) (TM) and Ford Motor Company (F) Battle in the U.S and China

Meanwhile in the U.S, Ford Motor Company (NYSE:F)’s sales increased an impressive 40% in 2012. Like General Motors Company (NYSE:GM), Ford is losing a lot of money in Europe — where Volkswagen AG (FRA:VOW) has been cleaning up — so the company’s growth is being driven by its home market and China. Any weakness seen in those markets should give investors a lot of pause.

Polk’s top 10 list of best selling cars in 2012 includes three Fords and two Toyota Motor Corporation (ADR) (NYSE:TM). The only truck in Polk’s top 10 ranking was the Ford F-series, which has been America’s best-selling pickup truck for 36 years straight.

However, in the U.S, few cars can compete with Toyota’s Camry which has been the top selling car in the country for 11 consecutive years, ranked fifth by Polk with 729,793 units sold worldwide. To compete with the Camry, Ford Motor Company (NYSE:F) redesigned their midsize sedan “Fusion” last year and to good effect. In the past three months sales were up 26%, but there is still a long way to go in the U.S. as Fusion sold 80,558 units versus 100,830 Camrys.

In 2012, Ford’s income dropped by $300 million to $5.7 billion, or $1.42 per share, from revenue of $134.3 billion which fell $2 billion from 2011. Toyota ended its fiscal year with a profit of $10.22 billion on revenue of $234.3 billion. Bottom line growth was driven by a 26.6% increase in U.S. sales over the very difficult 2011.

Toyota Motor Corporation (ADR) (NYSE:TM)’s share price had, like most of the Nikkei 225, risen sharply since the rally began back in December. Equity markets love quantitative easing, and export monsters like Toyota love cheap currencies. The $50 rally in Toyota — from ~$80 to $130 at the peak — has given back just $10 while the Nikkei has retraced more than 50% of its gain. But with that policy now in reverse and the yen strengthening, and likely holding in this current range, currency market de-leveraging is taking place and the Nikkei has taken a pounding which Toyota has so far mostly ignored.

I like the response by Ford Motor Company (NYSE:F) to the changes in the market as well as their drive towards simplifying their production processes. The Ford One program, while not as comprehensive as VW’s MQB plans, should help it keep costs under control and improve its responsiveness to market changes over the next decade.