Toyota Speeds Up Quest to Unseat GM
11-23-2005, 11:48 AM
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Toyota Speeds Up Quest to Unseat GM
TOKYO - Toyota Motor Corp. is quickening its quest to unseat ailing rival General Motors Corp. as the world's biggest automaker with reported plans to start manufacturing up to 100,000 Toyota vehicles at a Subaru factory in Indiana.
Word of Toyota's ramped-up production schedule comes just days after money-losing GM said it will close 12 facilities by 2008 in a move that will slash the number of vehicles it is able to build in North America by about 1 million a year.
The combined developments could help Toyota surpass GM in worldwide production, although it's unclear if that would happen because Detroit-based GM is growing rapidly in Asia.
Toyota expects to produce 8.1 million vehicles this year, while GM expects 9 million, according to Greg Gardner of Harbour Consulting, a manufacturing consulting firm.
Toyota will also chip away at GM's lead with a new pickup truck plant scheduled to open next year in San Antonio, Texas, that will add an additional 200,000 vehicles to Toyota's annual capacity. The Japanese company's output will be boosted by another 100,000 vehicles in 2008, when Toyota's new RAV 4 plant comes online in Canada.
Under the latest expansion plans, the world's No. 2 automaker has asked Fuji Heavy Industries, maker of Subaru autos, to start building Toyotas in 2007 at a Lafayette, Indiana, factory operated by Fuji's wholly owned subsidiary, Subaru of Indiana Automotive, the Asahi newspaper reported Wednesday, without citing sources.
Company representatives were not available for comment Wednesday, a national holiday in Japan.
Ann McConnell, a spokeswoman for Subaru of Indiana, said Fuji Heavy Industries and Toyota Motor Corp. have been in discussions, but that there has been no word of a decision yet.
There are five to six candidate models for production, the newspaper said, with the number manufactured annually to gradually increase to 100,000 vehicles. Earlier reports have suggested that Toyota might produce hybrid vehicles at the Fuji plant.
The Indiana plant produced nearly 120,000 Subaru models last year.
It wasn't immediately clear if Subaru production would be reduced or what the factory's total vehicle output would be.
Fuji teamed up with Toyota in October after ending a five-year tie-up with GM, which sold its 20 percent in the Japanese company. Toyota, based in Toyota City in central Japan, bought a 8.7 percent stake from GM for about $315 million to become Fuji's top shareholder.
Overall, GM lost almost $4 billion in the first nine months of this year, hit by falling sales and rising health care costs. Its share of the U.S. market has shrunk to 26.2 percent from 33 percent a decade ago.
The plant closings, which will entail 30,000 job cuts, are meant to chop $7 billion off its $42 billion annual bill for operations by the end of next year, including a $3 billion cut in health care costs.
Toyota, by contrast, is on pace to set a fourth straight year of record profits.
Both GM and Ford Motor Co., the world's third-biggest automaker, are seeing their U.S. market share because of Toyota and other Asian competitors. Toyota, Nissan Motor Co. and Honda Motor Co. are all reporting healthy earnings bolstered by their reputation for well-built, fuel-efficient cars at a time of surging gas prices.
GM's tie-up with Fuji was largely deemed a flop. But access to Fuji's plants could help Toyota boost production at a time of soaring sales, analysts say, although Fuji has only the one plant in North America, so additional capacity will be limited.
Completed in 1988, the Indiana factory was built under a joint-venture agreement between Fuji and Isuzu Motors Ltd. Fuji bought out Isuzu's share in the venture and became sole operator of the plant in 2003.
After GM's latest cost cuts, the company will be able to build about 4.2 million vehicles a year in North America, down 30 percent from 2002. Toyota is expected to have North American capacity of about 1.81 million cars by then, up from 1.44 million vehicles last year, Toyota spokesman Dan Sieger said Monday.
China is one bright spot for GM, which said last month that sales there rose 27.8 percent in the first three quarters of the year to 472,468 vehicles. Growth was fueled partly by a mini-vehicle joint venture with Shanghai Automotive Industrial Corp. (SAIC) and Wuling Automotive.
GM and Toyota have a long-standing partnership to share environmental technology, and they run a car assembly plant in California together, although the ties do not involve holding stakes in each other.
Out of concern for GM's plight — and possibly to stave off an anti-Japanese backlash by American consumers — Toyota Chairman Hiroshi Okuda suggested earlier this year that Toyota should raise the price of car models in the United States to level the playing field.
Toyota raised prices soon after, but denied the move was to placate U.S. automakers.
U.S. shares of Toyota, each representing two common shares, rose 40 cents to $99.74 in midday trading on the New York Stock Exchange. GM shares rose 52 cents, or 2.2 percent, to $23.79.
Word of Toyota's ramped-up production schedule comes just days after money-losing GM said it will close 12 facilities by 2008 in a move that will slash the number of vehicles it is able to build in North America by about 1 million a year.
The combined developments could help Toyota surpass GM in worldwide production, although it's unclear if that would happen because Detroit-based GM is growing rapidly in Asia.
Toyota expects to produce 8.1 million vehicles this year, while GM expects 9 million, according to Greg Gardner of Harbour Consulting, a manufacturing consulting firm.
Toyota will also chip away at GM's lead with a new pickup truck plant scheduled to open next year in San Antonio, Texas, that will add an additional 200,000 vehicles to Toyota's annual capacity. The Japanese company's output will be boosted by another 100,000 vehicles in 2008, when Toyota's new RAV 4 plant comes online in Canada.
Under the latest expansion plans, the world's No. 2 automaker has asked Fuji Heavy Industries, maker of Subaru autos, to start building Toyotas in 2007 at a Lafayette, Indiana, factory operated by Fuji's wholly owned subsidiary, Subaru of Indiana Automotive, the Asahi newspaper reported Wednesday, without citing sources.
Company representatives were not available for comment Wednesday, a national holiday in Japan.
Ann McConnell, a spokeswoman for Subaru of Indiana, said Fuji Heavy Industries and Toyota Motor Corp. have been in discussions, but that there has been no word of a decision yet.
There are five to six candidate models for production, the newspaper said, with the number manufactured annually to gradually increase to 100,000 vehicles. Earlier reports have suggested that Toyota might produce hybrid vehicles at the Fuji plant.
The Indiana plant produced nearly 120,000 Subaru models last year.
It wasn't immediately clear if Subaru production would be reduced or what the factory's total vehicle output would be.
Fuji teamed up with Toyota in October after ending a five-year tie-up with GM, which sold its 20 percent in the Japanese company. Toyota, based in Toyota City in central Japan, bought a 8.7 percent stake from GM for about $315 million to become Fuji's top shareholder.
Overall, GM lost almost $4 billion in the first nine months of this year, hit by falling sales and rising health care costs. Its share of the U.S. market has shrunk to 26.2 percent from 33 percent a decade ago.
The plant closings, which will entail 30,000 job cuts, are meant to chop $7 billion off its $42 billion annual bill for operations by the end of next year, including a $3 billion cut in health care costs.
Toyota, by contrast, is on pace to set a fourth straight year of record profits.
Both GM and Ford Motor Co., the world's third-biggest automaker, are seeing their U.S. market share because of Toyota and other Asian competitors. Toyota, Nissan Motor Co. and Honda Motor Co. are all reporting healthy earnings bolstered by their reputation for well-built, fuel-efficient cars at a time of surging gas prices.
GM's tie-up with Fuji was largely deemed a flop. But access to Fuji's plants could help Toyota boost production at a time of soaring sales, analysts say, although Fuji has only the one plant in North America, so additional capacity will be limited.
Completed in 1988, the Indiana factory was built under a joint-venture agreement between Fuji and Isuzu Motors Ltd. Fuji bought out Isuzu's share in the venture and became sole operator of the plant in 2003.
After GM's latest cost cuts, the company will be able to build about 4.2 million vehicles a year in North America, down 30 percent from 2002. Toyota is expected to have North American capacity of about 1.81 million cars by then, up from 1.44 million vehicles last year, Toyota spokesman Dan Sieger said Monday.
China is one bright spot for GM, which said last month that sales there rose 27.8 percent in the first three quarters of the year to 472,468 vehicles. Growth was fueled partly by a mini-vehicle joint venture with Shanghai Automotive Industrial Corp. (SAIC) and Wuling Automotive.
GM and Toyota have a long-standing partnership to share environmental technology, and they run a car assembly plant in California together, although the ties do not involve holding stakes in each other.
Out of concern for GM's plight — and possibly to stave off an anti-Japanese backlash by American consumers — Toyota Chairman Hiroshi Okuda suggested earlier this year that Toyota should raise the price of car models in the United States to level the playing field.
Toyota raised prices soon after, but denied the move was to placate U.S. automakers.
U.S. shares of Toyota, each representing two common shares, rose 40 cents to $99.74 in midday trading on the New York Stock Exchange. GM shares rose 52 cents, or 2.2 percent, to $23.79.
11-23-2005, 06:18 PM
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The world news tonight blamed part of the problem on retirement benifits. Seeing as how Chevy has been in buisness in America alot longer than Toyota (no kidding) they have to tack more on to the price of a new vehicle than Toyota. Acording to ABC news Chevy tacks on $1500 for retirement benifits vesus $300 dollars for Toyota. That doesn't change my viewpoint on buying American and retired people sure as hell can't live on social security alone. I would still rather pay more to keep my money here where it belongs.
11-23-2005, 10:05 PM
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I'm not comletely opposed to free trade but it has gotten a little overboard. We need major reform! Also I do appreciate Toyota opening plants in North America to give us jobs. Not only for the people who will work there but for the skilled individuals who will be needed to build the plants. But in the long run its not to help us 
, its to save them the cost of shipping them here and for the tax breaks that MY government gives them. 
There are several things we need from other countries so life would suck without free trade. I own several items imported from other countries. Its also not just the American free trade system that needs reform either. I recently read a interesting article about how the Chinese free trade system works. Their people actualy live in dorms at the factorys where they work! 
It not like it was slave labor or anything. The people were free to go to another factory if they pay more. They are a communist country thats capitalist at heart. Anyways the Chinese government doesn't charge the factorys in their free trade zones any taxes or fees on their goods as long as they provide proof that everything was exported out of their country. It kind of creates a weird reverse economy on those products for the Chinese people who want to buy them because they have to pay more to have them imported back into their county. 
My biggest gripe is when people complain about how bad our ecomomy is then go out into the parking lot and get into a Honda or Toyota. It breaks my heart and I have to just shake my head and shrug it off. I just hope that everyone buys American whenever possible and I'll be heartbroken if Chevy falls #2 to Toyota. 
It good news that Chevy is gaining in the Chinese marketplace.
Now its our chance to stick it back to someone else. 
Just kidding! 
, its to save them the cost of shipping them here and for the tax breaks that MY government gives them. There are several things we need from other countries so life would suck without free trade. I own several items imported from other countries. Its also not just the American free trade system that needs reform either. I recently read a interesting article about how the Chinese free trade system works. Their people actualy live in dorms at the factorys where they work! It not like it was slave labor or anything. The people were free to go to another factory if they pay more. They are a communist country thats capitalist at heart. Anyways the Chinese government doesn't charge the factorys in their free trade zones any taxes or fees on their goods as long as they provide proof that everything was exported out of their country. It kind of creates a weird reverse economy on those products for the Chinese people who want to buy them because they have to pay more to have them imported back into their county. My biggest gripe is when people complain about how bad our ecomomy is then go out into the parking lot and get into a Honda or Toyota. It breaks my heart and I have to just shake my head and shrug it off. I just hope that everyone buys American whenever possible and I'll be heartbroken if Chevy falls #2 to Toyota. It good news that Chevy is gaining in the Chinese marketplace.
Now its our chance to stick it back to someone else. Just kidding!
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