What's Good for GM is Good for Toyota

Senators McConnell and Shelby wrecked the auto bailout. They gave a litany of reasons, the basic gist being the Big 3 can't compete with Toyota. It's a valid concern. But, well, what about Toyota? Unlike the Big 3, foreign automakers have plants throughout the South. So do Southern GOP Senators somehow think they're voting for their region's "long-term viability," as the new "domestic" auto industry? If so, their badly mistaken. Toyota put out a statement today saying "the U.S. auto market is shrinking rapidly," and "a major bankruptcy would exacerbate an already difficult environment for Toyota and the industry." It seems counter intuitive: a global corporation calling for its closest competitor to receive government aid. Are they just posturing? George Magliano, Automotive Analayst for Global Insight, doesn't think so.

"Nobody benefits from a bankruptcy," he said. "It's just gonna be too disruptive for the industry. A bankruptcy by Detroit hurts the supplier base, and everybody uses that supplier base. That's the issue."

Seems logical. In fact, Jeffrey Liker, author of The Toyota Way, agrees. He also notes that:

"GM is a partner of Toyota through [their joint venture NUMMI] as well as a competitor."

"And if the American auto companies go under or are shadows of what they were, and the foreign automakers like Toyota are still strong, there could be a political backlash."

It seems that backlash has already begun. Grassroots campaigns like BoycottAlabamaNow.com are calling for "true Americans" to support "true American industries, not foreign companies that assemble products in the U.S." This site joins prominent blogs in suggesting someone "look into whatever contributions these Republican Senators have gotten from these transplant companies."

Oh, dear.

By slashing the tires of the auto bailout, Shelby and McConnell have undone decades of image building by Toyota. They've revived protectionist, anti-Japanese sentiment and endangered their suppliers. They have a funny way of supporting their states.

Comments

[sposton]

I see a lot Big Theee built SUV's and lately more of their cars. Yes, the management of the Big Three made many mistakes but I don't think they put a gun on anyone's head to buy their vehicles. These anti-union Senators from our friendly South wish to leave an impression that everything Big Three have done was wrong. I think this is just plain wrong or there would not be so many of their vehicles on the road.

Nobody mentions that the Japanese made some very similar mistakes in believing that the large trucks are here to stay. Nissan came out with their Titan series and Toyota Tundra exactly at the wrong time! What saved their behinds is better mixture of vehicles on the smaller end of the spectrum.

And I don't think Toyota would suffer if the Big Three went under. They are just engaging in a bit of preventive public relations work.

[SShaw490]

Tortured rationale that attempts to explain counterintuitive facts are sometimes genius - and sometimes nonsense. Any notion that the elimination of Toyota's top 3 competitors in the world - making Toyota, by default, the worlds largest auto maker by many orders of magnitude - is a bad thing for Toyota is a tough case to make. It takes a lot of tortured rationale to make it, and so far, nobody has been able to do it.

There's no doubt that bankruptcy of the big 3 would cause an upheaval in the industry, but at the end of the day, there will still be car buyers wanting cars, and their options will be narrowed to Toyota, Nissan, Honda, Hyundai, Mercedes, BMW, et al. The biggest problem Toyota will have is going to be making enough cars to satisfy demand - which is, definitively, auto maker Nirvana.

I'll say this for Toyota - they are the world's leader in public relationship management. They have managed to convince the United States that they make the best cars, they are a company of geniuses, they are the world leader in all things associated with manufacturing; and conversely, that the big 3 are idiots, lazy, overpaid, uncreative, backward losers. When there was a backlash against all those Senators who had Toyota/Nissan's interests at heart, their PR people leaped into action with tortured rationale. It ain't gonna work.

[danielgene]

The argument that the death of the Big 3 would leave Toyota in the enviable position of not having enough supply to meet demand ignores key factors: First -- in the short term -- Detroit would have a below-market "going out of business sale," where they'd take whatever they could get for their remaining fleets. Second -- in the long-term -- emerging car makers from China and India would move in. They'd take whatever the big 3 had of value at cost, and produce small, modest fuel-efficient vehicles similar to Toyota's -- but cheaper.

Toyota was doing just fine with the Big 3 as its big brothers. They'd rather not see an industry shake-up and an opening to the "next Toyota."

[DoesItReallyMatter]

You know whats really ironic? Until the last few years, the domestics had either assembly plants, parts suppliers and/or service parts warehouses in nearly every state of the Union (or is it dis-Union) especially in the South. All UAW represented. When few in the private sector wanted to prop up their pathetic economies, the domestics came in, not as carpetbaggers but providing good jobs at union scale wages. After decades of support, how are they now repaid, why the SOUTHERN WAY of course! A knife in the back, with an extra twist for the Unions. Yeah, now that's irony! This will NOT be forgotten in the Midwest. When the next hurricane flattens your coasts, look to your God for salvation, because we won't be there for you!

[BuckeyeGal]

Boosh: Hmmm, $15B or $156B? I'm thinkin', I'm thinkin. Hey don't joggle my elbow!

http://www.huffingtonpost.com/huff-wires/20081210/autos-whacking-the-taxpayers/

[WorkingClass]

Its not about helping Toyota. Its about destroying the UAW. There could be a bit of revenge against General Sherman mixed in. Toyota builds good cars and does a LOT of R&D. They will lead the pack for a long time to come.

[EinChicago]

Baloney. It's all about Toyota. Shelby is bought and paid for by them. Of course it's about union busting--but it's at Toyota's behest.

[TheJibreelaMonsters]

I bet you drive a Toyota