Sunday, July 23, 2006

Toyota: Not interested in GM alliance

Tuesday, July 18, 2006
Toyota: Not interested in GM alliance
David Shepardson / Detroit News Washington Bureau

WASHINGTON -- Toyota Motor Corp. has not initiated discussions with General Motors Corp. about a possible alliance between the two companies, a top U.S. Toyota official said Monday.

"We're sitting on the sidelines watching this like all of the other automakers," Jim Press, president of Toyota's North America unit, said Monday night during a dinner with reporters.

His comments followed an official statement released earlier Monday by Toyota that was the automaker's first public response to speculation that it was pursuing a tie-up of its own with GM as an alternative to GM aligning with Renault SA and Nissan Motor Co.

"Our investigation reveals no discussions with GM have been initiated by Toyota and we can only conclude that there is no substance" to the speculation, Toyota said in the statement.

The statement followed a weekend report in Business Week that cited an unnamed Toyota executive as saying Toyota may try to forge an alliance with GM.

Press said the company isn't worried about a Nissan-Renault-GM tie-up. If such an arrangement made those companies stronger that would help Toyota, he said, because the company is boosted by tough competitors.

"We have a lot of goals and objectives to run our own company. We have a lot of work to do. Our goal has never been to see how big we can be," Press said.

But he believes that with globalization there will be further consolidation in the industry.

"Over time the smaller players are going to have a rough time competing, especially on the investment side," Press said. "I don't know when and I can't tell you how but there's going to be eight or nine or seven large companies split up the world."

All automakers are keeping tabs on the GM-Renault-Nissan negotiations, which began Friday when GM Chairman and CEO Rick Wagoner and Carlos Ghosn, CEO of Renault and Nissan, met.

Analysts said Monday they doubted Toyota would seriously consider buying an equity stake in GM, but could increase joint ventures involving the two automakers. Toyota and GM have had joint ventures since the 1980s.

"GM respects Toyota and Toyota respects GM, but no way would Toyota seek that kind of alliance," said David Healy, an auto analyst with New York-based Burnham Securities. "They don't need it. I take Toyota at their word that they aren't interested."

Toyota has no reason to be worried about a Renault-Nissan-GM tie-up, Healy said. "It would cause all of GM's leadership to quit, and cost GM market share, which only helps Toyota."

Toyota is also sensitive to the appearances of taking over an American company.

"They would rather commit hara-kiri (suicide) than look like they were trying to take over GM," Healy said.

Toyota and GM have a long-standing relationship, including sharing a manufacturing venture in Fremont, Calif., and cooperating on research. GM recently sold a stake in Fuji Heavy Industries to Toyota for $315 million.

During the dinner with reporters, Press also addressed several other topics:

Michigan has always been in contention for a new Toyota engine plant, along with a number of other states, Press said. He declined to say when Toyota might announce a decision.

Toyota continues to have great success with hybrids, with just a three-day supply of Priuses on dealer lots. Press said the company expected to sell around 200,000 this year, nearly 10 percent of total vehicle sales.

Toyota is "seriously considering" bringing a vehicle to market in the United States that runs on E85, an alternative fuel made of 85 percent ethanol. Detroit automakers have embraced E85 and have made support of the corn-based alternative fuel the centerpiece of their campaign to fight back a congressional mandate to force increases in fuel economy for passenger cars.

You can reach David Shepardson at (202) 662-8735 or

© Copyright 2006 The Detroit News. All rights reserved.


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