Riddle: What is conspicuous by its absence?
Don Devlin
Chicago
Tribune Jim Mateja Column Jim Mateja 04/23/99 Copyright (C) 1999 KRTBN
Knight Ridder Tribune Business News; Source: World Reporter (TM)
CUNNING COURTSHIP FUELS GM, TOYOTA: The immaculate deception. General
Motors faked Ford and Chrysler executives right out of their
wingtips. GM and Toyota are teaming up to develop advance alternative
fuel vehicle technology, but that's just the proverbial tip of the
iceberg -- an iceberg of titanic proportions that Ford and Chrysler
ran into, at full speed, without warning.
While Ford waved its checkbook at Volvo, and Daimler-Benz waved its
checkbook at Chrysler, General Motors and Toyota simply waved and
winked at each other. And over the last year, GM and Toyota started a
secret courtship in the privacy of GM Chairman Jack Smith's backyard
barbecue on Sunday afternoons.
While Ford was purchasing Volvo, and Chrysler was busy being purchased
by Daimler-Benz (anyone who thinks the two are mutual share-and-share
alike partners has been sniffing glue), GM and Toyota were
surprisingly quiet. So quiet it was seen as a sign of weakness --
emotional, psychological and financial.
But what some saw as weakness was actually a sign of cunning. While
cash-rich automakers shopped cash-poor ones publicly in the media, GM
and Toyota were off in a corner chuckling in private. GM and Toyota
cut future product and technology investments -- not to mention
development times -- in half without having to purchase one share of
each other's stock or pay off $1 of each other's corporate IOUs.
Back in the 1980s, then-Chrysler Corp. Chairman Lee Iacocca warned
that only a handful of auto powers would survive the next millennium
without consolidation into a Global Motors. Iacocca was a soothsayer.
Talk about a Global Motors. GM Vice Chairman Harry Pearce points out
that GM and Toyota had products in every market segment in every
market of the world before becoming partners. While their rivals were
taking on each other's debt, GM and Toyota agreed to take on each
other's technology. Ford acquires Volvo and boasts of adding 100,000
Swedish vehicles annually to its sales tally.
GM and Toyota agree to share each other's technology and, in doing,
note that the pair already account for 25 percent of the total sales
in the world, minus, of course, 100,000 Volvos. GM and Toyota
initially will focus on advanced alternative fuel technology. But what
is technology without vehicles to put that technology into?
GM and Toyota will build vehicles, too, at their joint venture New
United Motor Manufacturing, Inc., or NUMMI plant in Fremont, Calif.,
which years ago had been the site of Chevy Camaro/Pontiac Firebird
production, but for some years now has produced Toyota Corolla cars
and Toyota Tacoma trucks along with the Chevy Prizm, a Corolla
offshoot.
The agreement between GM and Toyota was a year in the making, long
enough, sources say, for the two to already have planned joint
production of a new vehicle at NUMMI for 2002 or 2003, perhaps a
hybrid gas/electric SUV.
Prizm likely would be dropped to make room for the hybrid as well as
for the Prius, Toyota's gas/electric hybrid sedan that arrives in the
U.S. this fall and is built off the next generation Corolla platform.
Some argue not to make too much of the GM-Toyota pact since it is only
for five years. Baloney. That's five years for starters.
Insiders say the focus the first five years will be alternative fuel
technology and alternative fuel vehicles. Once they have a handle on
that, the pact will be renewed and the focus will turn to phase II.
Perhaps, insiders suggest, phase II would focus on new technology to
build vehicles more cheaply, a market Toyota seems to have a corner on
already, but one in which GM is only a bit player. Or maybe it would
be on development of new trucks -- GM's strength and Toyota's
weakness.
And what about their rivals? If Ford and DaimlerChrysler aren't
sending bottles of wine and bouquets of roses to Honda and BMW
executives right now, we'd be very surprised.
...
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Copyright 1998 Chicago Tribune 1-800-TRIBUNE Tel# 312-222-3232
Distributed by Knight-Ridder/Tribune Business News.
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Jim Mateja, auto writer, no e-mail, only answers mail through his
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