(05/14/2005) Clyde Prestowitze quoted in The Associated Press
A matter of tact Toyota fears U.S. backlash as GM struggles
May 14, 2005
A matter of tact Toyota fears U.S. backlash as GM struggles
Yuri Kageyama, The Associated Press
TOKYO - With the heads of General Motors and Toyota meeting this
weekend in Japan, their concerns couldn't be 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
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
environment-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
The Big Three U.S. 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.
As GM Chief Executive Rick Wagoner and Toyota President Fujio Cho were
meeting this weekend near Toyota's headquarters, Japanese auto
executives appeared to be making some pre-emptive moves to head off any
anti-Japanese sentiment among American consumers.
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 an
editorial this past week. "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. 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.
"Ultimately, U.S. consumers are consumers first and citizens second.
Most people don't really think about where their vehicles are made,''
said Walter McManus, an auto analyst at the University of Michigan
Transportation Research Institute.
"The attitude of 'buy American' - in cars at least - is pretty much gone,'' he said.
If anything, McManus said, Okuda's comments about raising prices on
Toyota cars to help GM could backfire, at least among U.S. autoworkers.
"It may have been said with the best intentions, but it sounds condescending,'' he said.
Still, Japanese automakers remember well the trade friction from the
1980s and the Clinton administration's threat to curb Japanese auto
imports 10 years ago for alleged unfair trade practices. And as a
country heavily dependent on exports, Japan wants to do everything
possible to avoid trade friction with the United States, its biggest
"The executives of Japanese automakers today all endured tough times
back then and don't want to see a repeat of that history,'' said Koichi
Sugimoto, auto analyst with Nomura Securities Co. "They can't help
having that gut level reaction.''
Clyde Prestowitz, a former trade negotiator in the Reagan
administration, said a massive slowdown in the U.S. economy could chill
ties with Japan.
"In a booming U.S. economy, it's fine. But if there's any kind of
economic downturn, I wonder what the politics of that are,'' Prestowitz
A significant step toward closer cooperation between U.S. and Japanese
auto companies would be a possible joint venture between GM and Toyota
to produce environment-friendly hybrid vehicles or fuel-cell vehicles
in the United States.
The venture would allow the world's two biggest automakers to share the
costs of developing fuel-cell cars - which many in the industry believe
will eventually replace gasoline-powered vehicles. Fuel-cell vehicles
emit no pollution because they run on power produced when hydrogen
stored as fuel in the car combines with oxygen in the air to make
The Nihon Keizai Shimbun, Japan's biggest business daily, reported
Thursday that Cho and Wagoner could discuss the project at their
meeting today, although the report denied a deal was imminent. GM's
spokesman for advanced technology Scott Fosgard denied that any
specific talks about a technology pact were planned.
In another move that could be seen as trying to warm ties with the
U.S., Toyota said earlier this year that it will build hybrid vehicles
at a plant in the United States. According to a report on the Kyodo
News wire service Thursday, Toyota picked its plant in Georgetown,
Kentucky, as the production site, but Toyota officials would not
confirm the report.
Toyota and GM already have a partnership, although it does not involve
investment stakes in each other. They run an auto plant in California
together and have exchanged research before, including a 1999 pact to
work on environmental technology together.
Still, the worries keep looming.
Prime Minister Junichiro Koizumi and U.S. Chamber of Commerce President
Thomas Donahue discussed concerns about GM at a meeting Thursday.
Koizumi told reporters he had also met with Okuda, who said he was very
worried about the plight of American automakers, and they agreed on the
need to work out cooperative relations with U.S. automakers.
"The auto industry is a symbol of the United States, and we wish the best for GM,'' Koizumi said.
Associated Press writer Malcolm Foster contributed to this report.