Toyota Continues to Close In on Big 3

October market share numbers for the domestic automobile industry tell the whole story. For years the Big 3 (GM, Ford, and Chrysler) have commanded the majority of sales in the United States. Once as high as 70%, their combined market share has been falling fairly precipitously in recent years, hitting 55% last month.

More interestingly, however, is the fact that Toyota Motor (TM) is closing in on Chrysler’s number three position in terms of market share. Not only should they surpass Chrysler soon, but Ford’s number two position is also in jeopardy, as seen by the six top sellers:

GM 22%
Ford 17%
Chrysler 16%
Toyota 15%
Honda 10%
Nissan 7%

Investors, after seeing these numbers, will probably want to rush out and buy shares of Toyota Motor (TM). However, does increasing share in the U.S. thanks to superb quality, value, and fuel efficiency, translate into a winning stock price?

As you can see from this chart, TM shares have been on fire recently but still trail the highs set in 2000. After more than doubling in the last two years, investors might want to wait for a pullback before adding TM shares. Although business is good and Toyota is taking share, the car business is still a tough one, and the stock today is pricing in a lot of good news.

Much like Southwest Airlines (LUV) and JetBlue (JBLU), the best companies in extremely competitive industries don’t always shine as much as some might think.