Toyota fears U.S. backlash as GM struggles

updated 7:03 p.m. ET May 16, 2005

TOKYO - When the heads of General Motors and Toyota met in Japan over the weekend, their concerns could not have been more different: GM is losing money and market share, while its Japanese rival is worried about doing too well and sparking a protectionist backlash in the United States.

Some analysts say it is only a matter of time before Toyota surpasses General Motors Corp. as the world's No. 1 automaker.

GM's problems are many. Saddled with huge health care and pension liabilities, it lost $1.1 billion in the first quarter. Its bonds were just downgraded to junk status. Its stock hit a 10-year low in April.

Toyota Motor Corp., meanwhile, reported $2.8 billion in profit in the same quarter and commands an edge in the market for environmentally friendly hybrid vehicles, which run on a combination of electricity and gasoline.

The companies' divergent fortunes — symbolic of the two nations' broader auto industries — have Japanese auto and government officials worried about a replay of the "Japan-bashing" trade friction of the 1980s, when Toyota and others were blamed for stealing car sales and U.S. jobs, prompting outraged auto workers to smash Japanese cars in protest.

The U.S. Big Three automakers — GM, Ford Motor Co. and DaimlerChrysler AG's Chrysler Group — have seen their combined U.S. market share fall from more than 63 percent four years ago to about 57 percent, according to research firm Autodata Corp. During that same period, Asian makers have boosted their share from 30 percent to 36 percent.

GM Chief Executive Rick Wagoner and Toyota President Fujio Cho met over the weekend near Toyota's headquarters in what was described Monday as a courtesy call reaffirming the longtime partnership of the two companies.

The two executives and Toyota president-elect Katsuaki Watanabe met Saturday over dinner in Toyota city after Wagoner visited the nearby 2005 World Expo in Aichi, said Toyota spokesman Paul Nolasco.

But he denied Japanese media reports that Cho and Wagoner discussed sharing hybrid technology or setting up a joint venture on fuel cells.

Toyota and GM already have a partnership but it does not involve investment stakes in each other. They run an auto plant in California together and exchange research under a 1999 pact to jointly develop environmental technology.

The meeting between Cho and Wagoner comes at a time when Toyota’s rosy fortunes contrast with GM’s losses.

Toyota Chairman Hiroshi Okuda caused a stir recently by saying he was considering raising prices on Toyota cars in the United States in a bid to aid ailing U.S. rivals, as well as sharing technological research with American automakers.

"The decline of the once invincible American auto industry in the face of Japanese competition could set off a nationalistic backlash among American consumers," the Japanese daily Asahi Shimbun warned in a recent editorial. "There is every reason for Japanese automakers to work hard to avoid unnecessary conflict."

Such fears are overblown, analysts say.

For one, the Bush administration is much more concerned about imports from China than Japan. In fact, after leaving Japan GM's Wagoner traveled to China, where he is scheduled to speak at a business forum this week.

And over the years, Toyota, Honda Motor Co. and Nissan Motor Co. have made a point of opening plants in the United States and buying U.S.-made parts.

Also, Japanese cars are not only popular, they're viewed as setting the standard. Americans are global consumers, seeking the best quality and price on products, regardless of where they are designed or made.

MORE FROM AUTOS

Autos Section Front

Chinese automaker aims to compete globally CEO lays out ambitious Chrysler road map Cars are approaching ‘auto’ pilot mode Review: Toyota Venza falls short What automakers have in store for 2010 Ford to put air bags into back seat belts Clunker deals: old Ford pickups for new ones New Dodge models part of Chrysler’s plans U.S. rips Toyota statement on floor mats GM posts first sales gain in nearly two years Autos Section Front   Add Autos headlines to your news reader: