In a break with TTAC tradition, today’s WAR comes from an “authoritative” source: Reuters. OK, it’s Kyodo news via Reuters. (Free marketeer that I am, I’m not so sure I trust a “nonprofit cooperative news agency.”) “The Kyodo news report said Toyota was expected to consider quick fixes for the cash-strapped GM, including buying up its assets and helping it secure sufficient business funds. The executives of the world’s two biggest automakers may also discuss an expanded business partnership, including Toyota making fuel-efficient compact cars for GM and providing hybrid-car technologies to the U.S. carmaker, Kyodo said, citing sources.” Obviously, this is complete and utter nonsense. Except that maybe it isn’t. If you recall, the last time GM was staring down the barrel of C11, back in May 2005, Rick Wagoner DID hop a Gulfstream for Tokyo and met with then-Toyota President Fujio Cho. The nature of those discussions was never revealed. (Until now: Pachinko!) Students of these turbulent times may also remember that Toyota offered to raise its prices to help GM (I shit you not). As TTAC has pointed out many times, GM’s survival is in Toyota’s best interest; the American automaker sets a profitable “floor” for all U.S. new car prices. This is definitely a rumor worth watching.
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Toyota offered to raise its prices (as I am sure you meant to write).
I mentioned this a few months ago, and have been thinking of it for about a year now. It works.
Toyota can purchase GM for chump change, and has the resources to shut the whole operation down if they cannot impose a new order on the General.
They can hive off GM, force it into ch11, and proceed to rationalize management, workforce and dealer network. They have the advantage of being able to outwait any or all who won’t comply, though there may be a legal cost. Still, by stalling they can divide and conquer.
What emerges is a lean management structure, a properly educated and reasonably compensated workforce, and a powerful dealer body. Toyota’s credibility ensures that buyers will return to whatever is left of GM, and Toyota grows market share by the simplest means available.
The real stumbling block is European antitrust issues. They will not be happy on the continent with a megalithic colossal, um colossus.
It would work for America though….
Rick W. wants to sell NUMMI plant to TM. Raises cash which is the only thing GM wants these days.
michaelC :
Right you are. Text amended.
Don’t necessarily buy that this is a bailout per se. More likely that this is the first steps toward a possible buyout?
Besides, I don’t care. Much better they bail each other out than we the taxpayers do.
If Wagoner manages to shrink GM’s share enough, then Toyota can buy them without triggering anti-trust challenges. Still got a little way to go.
Besides, I don’t care. Much better they bail each other out than we the taxpayers do.
Ah, but won’t that get your goat knowing that the next Camry you buy could be propping up that Malibu?
I can see Toyota sharing technology and research with General Motors in North America. It is convenient to have Toyota and GM’s R & D within 40 miles of each other IF there were to be any sharing of resources.
Perhaps Toyota is interested in OnStar? The vast majority of the shared suppliers have base operations in SE Michigan so it would be wise for Toyota to make sure things are solid on that end. In the end, the future of the automobile industry will be one of sharing and group projects It is simply too expensive, even for Toyota, to develop certain projects all alone.
Rumors are not wild ass: Reuters reported it. I personally think we would be better off restoring TV production in US. There are no crooked execs and politicos/lobbyists to overcome. We were the leader in TV manufacturing way before Korea and China. Why nobody waants to get those jobs back?
Reading this post, I couldn’t help but think of Microsoft’s surprise injection of $150 million to prop up Apple 11 years ago. Some might be worrying about a merger between Toyota and GM, but if you consider the possible parallel to Microsoft’s Apple bailout, Toyota’s goal may be along Microsoft’s vein–to make sure they are never the only game in town.
Again, Toyota has the deep pockets, and the expertise required to make a going concern of GM. The GMS is close enough to the “Toyota Way” to make a go of things, and moreover, the dealers/workers and execs that Toyota drags out of the morass will be quiescent, devoted allies.
This really would represent the best outcome for everyone at GM below the ranking of General Manager.
Robert,
I must have missed it. What does this mean: “As TTAC has pointed out many times, GM’s survival is in Toyota’s best interest; the American automaker sets a profitable “floor” for all U.S. new car prices.”
Are you saying that because GM is so insanely inefficient, it keeps the price of cars up so that Toyota can make a better profit?
Does this mean that if we let GM die, we might see a new American car company rise out of the ashes that could threaten Toyota?
As TTAC has pointed out many times, GM’s survival is in Toyota’s best interest; the American automaker sets a profitable “floor” for all U.S. new car prices.
There could also be the possibility of xenophobic tariffs or some other pro-American legislation, Japanese-bashing, etc. as a result of a healthy Toyota and a dead GM. Didn’t something like that happen in the ’70s? I wasn’t alive then- I was born in 1985- so someone correct me if need be.
That being said, maybe Toyota can take a look at the Corvette and remember that they used to make fun cars, too. (MR2, Supra, Celica)
Slapping a Chevy bowtie on a Corolla [cough]Prizm[cough] would patch the gap caused by the Cruze delay and actually allow MB to say that “quality is no longer a differentiator” with a straight face.
There’s obviously something big in it for Toyota. They may come off as gracious, but they ain’t stupid.
Is there really that xenophobia anymore? Half the country is buying foreign; doubt they will get too pumped about calling themselves unamerican.
And yes, Toyota would prefer it if the Big 3 stayed viable. In boxing, they have “tomato cans”— fighters that are not very good, and only get fights so they can bleed a lot and pump up the wins of a better fighter. GM is Toyota’s tomato can. If/when they fall it will make space for competitors that could grow to provide a true challenge for Toyota in the future.
toxicroach, trust me, they still exist.
My father in law, who passed away several years back, was a life long resident of Hawaii and a Pearl Harbor survivor. He had an interesting theories about Japan in the 1940’s and throughout the 70’s, 80’s and 90’s.
He told stories of how people would come up to his family home and offer to buy it at prices far above the market value. He also told stories about how foreign companies were buying up hotels, golf cources, real estate, etc all over the Hawaiian Islands.
He had a favorite statement that went something like “they couldn’t take Hawaii by force in the 40’s so they came back and took it the American way. They bought it.”
I don’t know if that statement has any truth to it or not. However, looking at what has happened to America in the last 50 years would support a statement more like America just plain sold out. Our electronics, steel, aircraft, and textile industries are long gone. The last piece of American manufacturing is the auto industry and I am afraid that that will soon be gone as well.
Reguardless of weather GM, Ford, or Chrysler continue to exist or not people will continue to buy cars. These cars will be built in many US plants and foreign plants. The UAW and the so called big 2.3 will send their pigs to the public money trough begging for handouts trying to survive but in the end the US auto industry is doomed to fail.
Legacy costs, greed, short sighted management, too many brands, too many dealers, etc will insure this failure. Companies such as Toyota, Nissan, Hyundai, etc. operate profitable manufacturing facilities in the US paying a fair wage to their workers and their management. They currently are not or will they ever be burdened with out of control legacy costs, shortsighted management, or golden parachutes.
Toyota buying GM? If that happens we will soon see the end to any plant that is in the control of the UAW. If that does happen it would be only to bankrupt the company and pick up the market share left in the vacuum.
A 2008 Pearl Harbor. Or should we call it RenCen?
Why Wild Ass?
I’ve seen whackier:
– Daimler buys Chrysler
– Cerberus buys Chrysler
– Porsche buys VW
– VW buys parts from GM as pennance for Lopez
Toyota snapping (or propping) up GM, Chrysler et al before the gummint gets its hands on them makes more sense than any of the above. Toyota fighting against GM? Easy. Japan fighting Washington? Well, it’s been tried before.
It’s not a question whether another company could buy GM and the kitchen sink. At current stock valuations, Porsche could finance a GM buyout with a few option trades. The trouble is: Nobody wants them.
PS: I don’t think a Toyota / GM merger would faze the Euro regulators. Neither dominate the European marketplace.
So is Wagoner going to have to crawl through that same doggy door that Homer went through to beg for his old job at the nuclear plant?
Sorry that obscure Simpsons reference came to me as I read this.
I don’t think that many of the initial posters get it…
I highly doubt there would be any sort of corporate merger or aquisition of the whole (or large part) of GM – with GM comes lots of headaches… – and the a big drag, as you’re then responsible for such headaches – ie – union workers, their contracts, healthcare and pensions, etc…
But – pumping in a billion or 15 makes sense…
either with visible partnerships such as platform / technology / logistics sharing or invisible partnerships…
Like the original post says – gm helps to set the price floor, which helps everybody make more money (in theory)…
Don’t forget this scenario: If GM (and Chrysler) stay afloat, they can continue to supply the rental (and ultimately the late model used) market. I don’t know if Ford has learned the lesson of how rental business affects resale values or not, but Toyondissan certainly have.
If there’s no GM or Chrysler to fill the rental role, Hyundai and Kia fill the gap. Not Good for Toyota, and they would be suicidal to allow that to happen.