Toyota: No Plans To Join Alliance with GM
July 20, 2006Toyota Doesn't Plan to Join Alliance With GM, Nissan and RenaultBy JATHON SAPSFORD, The Wall Street Journal, July 20, 2006 8:18 a.m.
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TOKYO -- Toyota Motor Corp. denied Thursday it has any plans to involve itself in alliance negotiations between General Motors Corp. and other rivals. The Japanese auto maker also offered an elaborate apology for a worrisome series of recalls that have tarnished its considerable reputation for quality, and which may lead to a public reprimand by the Japanese government.
GM is negotiating with rivals Renault SA and Nissan Motor Co. about a possible three-way alliance, which could include an exchange of equity. Toyota, with well over $30 billion in cash reserves and with existing cooperation arrangements with GM, is the one global auto maker that could derail any such plan. It could do this if it tendered its own bid for some sort of tie-up with GM, a move that would constitute what one car industry executive called an "effective veto" over any deal between GM, Renault and Nissan.
Nothing of the sort will happen, said Toyota president Katsuaki Watanabe. He stated strongly that his company has no interest in either blocking or joining the alliance talks. "We are not thinking about anything like that," Mr. Watanabe said at a Toyota's midyear news conference in Tokyo.
Mr. Watanabe also said Toyota's existing areas of cooperation with GM, including a jointly operated auto plant in Fremont, California, called New United Motor Manufacturing Inc. are valued highly by Toyota. "We'd like to keep these arrangements as they are," Mr. Watanabe said, adding that Toyota is open to more areas of cooperation with rival car makers. He provided little reason to suspect Toyota was considering something specific and new with GM.
The news media and financial industry have been speculating about a possible role for Toyota in any deal with GM and other rivals, in large part because of Toyota's growing role as an industry leader. Toyota has yet to surpass GM as the world's largest car maker by volume, but it has already secured a leadership position by other measures. It is more profitable, and growing sales and market share faster, than any other major car maker. Toyota said it is sticking to its initial global production plan for this year, targeting production of 9.06 million vehicles. It is also maintaining its global sales target to sell 8.85 million vehicles.
Such a leadership role can be a burden. For months, critics have worried that Toyota is sacrificing some of its vaunted quality in a rush to bring new products to market and grow further. In recent months, Toyota has recalled hundreds of thousands of vehicles. One case involved a model sold in Japan known as the Hilux Surf, which was in a head-on collision, leading to a serious passenger injury. The police alleged negligence, but Toyota has denied wrongdoing.
Japan's Ministry of Land, Infrastructure and Transport is examining Toyota's handling of recent recalls, and ministry officials are hinting that some sort of public reprimand for Toyota may be in order. Any such official censor would be largely symbolic, said one official familiar with the matter, and probably wouldn't carry any fines or penalties.
For Toyota, however, quality and safety are the cornerstones upon which its entire global operations are built, and despite denials of breaking any rules, Toyota went out of its way to show contrition for the recalls at its news conference in Tokyo. At the same time, Toyota boasted of no new products or expansion plans, as has become common at its recent media events. The company gave no press materials to the news media. Toyota's senior management team even shunned the open-collar, short-sleeved shirts the company has adopted for summer to help cope with Japan's sticky weather, opting instead to appear in dark suits.
The message behind the funeral-like atmosphere was clear: "I take this seriously and see it as a crisis," said Mr. Watanabe. He then bowed deeply in front of the cameras, and added that, "I want to apologize deeply for the troubles we have caused."
7/20/2006 09:34:00 AM
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