As GM courts partners, Toyota watches closely

Toyota officials tend to be edgy about a possible protectionist backlash in the U.S., remembering all too well the "Japan-bashing" of the 1980s. Japanese automakers were blamed for stealing car sales and U.S. jobs, and outraged auto workers smashed Japanese cars in protest. It's only in recent years Japanese automakers have won trust as corporate citizens in the U.S.

For decades, Toyota has had relatively friendly relations with General Motors. Toyota also has an agreement on hybrid ecological technology with Ford Motor Co.

From "salarymen" to prime ministers, Japanese are well aware of the importance of General Motors to the U.S., symbolized in the line, "What's good for General Motors is good for the country," similar to the way Toyota has a special place in Japan as the nation's top automaker.

Toyota officials say they used to look to GM as an example when Toyota was building its business and playing catch-up with American automakers. Toyota and GM set up a joint venture manufacturing plant in Fremont, California in 1984, called New United Motor Manufacturing Inc., or NUMMI, and the two companies have exchanged information on advanced environmental technology for autos.

The nervousness about GM's recent problems has been growing as it became increasingly clear that Toyota's and GM's fates couldn't be more different.

Toyota's profits are ballooning, at $12 billion for the fiscal year ended March 31, its sixth straight record fiscal year, boosting market share in the U.S. thanks to a reputation for quality and fuel efficiency.

Before the possibility of the GM-Renault-Nissan mega-alliance, some analysts had said it's probably only a matter of time before Toyota overtakes GM as the world's biggest automaker in annual vehicle production and sales.

Toyota President Katsuaki Watanabe says the company is taking a hands-off approach as a spectator to the GM talks with Renault and Nissan, but he stressed that Toyota's ties with GM will continue, including NUMMI.

"I feel it is an extremely great presence in a leading American industry," he said of Toyota's view of GM.

In recent years, Toyota has been wooing GM to work together in ecological technology, such as hybrid and fuel-cell cars, a collaboration that won't involve a capital investment but be symbolic in fostering exchange.

But GM forged an agreement last year with German automakers DaimlerChrysler AG and BMW to work together on hybrid technology, appearing to spurn Toyota's overtures.

In a move widely seen as bailing out GM's financial mess, Toyota bought a 8.7 percent stake in Fuji Heavy Industries Ltd. for about $315 million last year and became the top shareholder in the maker of Subaru cars. GM decided to sell its 20 percent stake in Fuji as part of its efforts to focus on its North American operations.

Koichi Sugimoto, auto analyst with Nomura Securities Co., said Toyota is so powerful it's unlikely to be threatened by a GM-Renault-Nissan alliance.

If anything, he said, Carlos Ghosn, who heads both Renault and Nissan, decided to go ahead with the talks with GM Chief Executive Rick Wagoner partly to fight Toyota's domination.

"Toyota is so impeccable and ruthless, competing against it is getting extremely tough," said Sugimoto. "Rivals have to come up with new ways to compete."

Ghosn already has celebrity status in Japan for having engineered Nissan's turnaround from near-collapse since 1999. Helping GM — if it works — would add to his reputation.

Ghosn denied he is trying to fight Toyota's domination with the alliance, but he was careful to stress GM's symbolic importance.

"I am totally aware General Motors is an icon in the U.S.," he said in Tokyo. Nissan has a similar status in Japan and Renault in France, he added.

"Because I know that, I don't believe in anything hostile," Ghosn added. "I believe this has to be a strong partnership."

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