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Toyota buying GM ?

Discussion in 'The Lounge' started by ratzila, Jun 15, 2005.

  1. ratzila

    ratzila 1/2 ton status

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    The Toyota Files
    Is the Japanese giant eyeing one of Detroit's Big Three?By Rich Smith

    Updated: 12:07 p.m. ET June 9, 2005Call me a conspiracy theorist. Go ahead, I can take it.

    advertisement

    Now that we have that out of the way, here's what I'm thinking: Toyota(NYSE: TM) wants to buy GM(NYSE: GM). Or maybe Ford(NYSE: F). But more likely GM.

    You see, when Toyota's Chairman Hiroshi Okuda opined a couple months ago that it might be prudent for Toyota to raise its prices a tad to give Detroit's automakers some breathing room, it could have been mere hubris -- Toyota needling the competition, suggesting that Detroit can only compete on price and not quality.

    It could also have been a sign. For here comes Mr. Okuda again, suggesting that not only can't Detroit compete, but both Ford and GM might actually, and I quote, "crumble." This has resulted in a jingoistic backlash by American car buyers against the Japanese who laid Detroit low (never mind that if Ford and GM do indeed "crumble," those same car buyers won't have much choice but to buy imports, seeing as there would be no alternatives).

    Now take those two factoids and combine them with GM CEO Rick Wagoner's recent trip to Toyota HQ to not discuss buying some hybrid technology from the masters of the craft. Consider the silliness of the CEO's assertion that he was actually in town to discuss collaborating on fuel-cell research ... a technology that may never become commercially viable. Har.

    So GM wants to talk about fuel cells for tomorrow, when it's sadly lacking in hybrid cars today? Har-har.

    And Toyota wants to partner this monumental undertaking with a company that its own chairman is publicly suggesting might go "poof!" at any moment? Hardy-har-har.

    Still skeptical? You say that neither Ford nor GM would ever "pull a Chrysler" and sell out? Then consider two more facts suggesting just how tempting this scenario might be for all parties concerned: GM and Ford currently sport market caps of below $19 billion. Toyota has more than $19 billion in the bank. And incidentally, GM and Ford are each trading for about their cash on hand (if you ignore the piles of debt behind the curtain). So theoretically, a buyout of either of the Detroit giants would essentially be an even exchange: We give you our company, you assume our debt. Does any of this suggest a buyout scenario to you?

    It does to me. But then, I'm a conspiracy theorist.

    Fool contributor Rich Smith owns no shares in any company mentioned in this article, though he has, on occasion, claimed to see dead people. The Motley Fool makes no representations, express or implied, about his mental competence.
     
  2. mr_blasto

    mr_blasto 1/2 ton status

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    Pretty interesting stuff. I think it is going to be very interesting to watch what happens in the car industry over the next two years. Gm is looking soooo bad, and ford is not looking so hot either. A lot of speculating going on at this point, but apparently gm is taking a gamble and letting it all ride on hydrogen technology - which as it turns out is a total crock itself. They have huge retirement liabilities, and a dismal looking immediate future. I guess they just laid off a ton of people to help cut costs. I find strategy and the like so fascinating especially in the auto industry.
     
  3. divorced

    divorced 3/4 ton status

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    I've often wondered, are there unions in Japan? The ones like we have here that are pushy and overly demanding? The ones who continue to financially break companies every day? Just curious. I know that the Japanese workers probably don't make near as much money as US workers, but I can't help but think that maybe if our workers and the unions weren't so demanding that we would be a little better off. I also think that we are a lazy nation, it won't be long until Japan and China own the US.
     
  4. Z3PR

    Z3PR Banned

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    I don't know what I'll do if GM sells out to a Jap car company. Guess I'd just own older pre sell out cars then. Heck even my daily driver (2000 Olds Alero) is a little too ricey for my likes, but what can I do, I have too have a fairly new car for everyday driving. Man that sucks.
     
  5. TSGB

    TSGB 1 ton status

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  6. tiger9297

    tiger9297 1/2 ton status

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    You know you would think that the sorry politicians that run this country would for once see that we are heading down the toilet and Japan and China are slowly taking control. I guess the payoffs and the money that they receive for allowing these things to happen is just too much. They figure that by the time it happens they will have spent all their money, be dead, and someone else will have to worry about it. Quite a contrast to the way this country was back during WW II. We built everything, it was quality stuff, and people were extrememly proud to be American. Not so anymore.
     
  7. 84CUCV

    84CUCV 3/4 ton status Premium Member

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    Mr blasto, why do you say GM is looking bad?? What did i miss.........


    mike
     
  8. mrk5

    mrk5 The Sticker Guy Moderator Vendor GMOTM Winner Author

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    You hadn't heard they are laying off 28,000 workers over the next 3 years?
     
  9. dyeager535

    dyeager535 1 ton status Premium Member

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    Uhh, did you look at the specs of that vehicle? 5.3L, 18/21 MPG in the 1/2 ton.
    I thought the point of hybrids were to get better economy. That's about where trucks should START anymore. Wow, 3MPG better than my truck that was built with parts from 1974-1986 and carburated. That hybrids only 31 years newer than the parts that got me close to that.

    Edit: LOL, that's the economy of the *2WD* hybrid. 4WD is a whopping 17/19! bahaha.

    Acura RX400 (SUV) is rated at 31/27.

    GM US is hurting (I thought Ford was in worse shape, what do I know) because they are still behind the times. Even in something as "niche" as hybrid vehicles they can't take what others (Toyota for instance) have done successfully, where customer demand is amazing even with a fairly high cost, and make it profitable.

    I mean come on. They use the same "huge" (by import standards) engine that is used in their non-hybrid trucks, probably to save on R&D making a more efficient drivetrain work. So instead of coming out with something truly revolutionary, or something that would save amazing amounts of money in fuel, they come out with something that gets marginally better mileage, yet MUST cost more than the typical truck because the hybrid stuff is just tacked onto the existing engine. It seems that most of their "innovation" if you want to call it that, is focused on trucks, because they don't have to think nearly as hard about increased fuel economy as they would if they tried to build cars people *want*. "Our diesel puts out XXXHP and torque, first in class!" (but a truck is the only place we will spend any time/money improving because we don't have to spend nearly as much on R&D)

    They can come out with something as interesting as an SSR, yet can they make a viable hybrid? Nope. Of course, the only thing new about the SSR is likely the body, everything else is probably shared with other platforms. No surprise there.

    How about the Pontiac Vibe? No wait, I mean the Toyota Matrix. Same vehicle with different grille and badging, yet costs more and has less of a warranty. Great approach to customer value.

    GM's marketing and design has been stagnant for a LONG time. From what I've seen they have done quite well with their overseas acquisitions (Daewoo, etc) but they continue to run the same, non-profitable line in the US.

    I stopped caring what happened to GM about the time they stopped making RWD cars. Maybe it was when I found they wouldn't even support customers with parts on vehicles less than 10 years old. Getting rid of historic divisions doesn't help either. It's not the divisions fault that GM let their reputation and customer loyalty go down the drain.
     
    Last edited: Jun 16, 2005
  10. sled_dog

    sled_dog 1 ton status

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    Modern GM trucks are very dissapointing in my opinion. Yeah like Dyeager point out, they have the Hybrid, sure, but it gets 3 mpg better then the full gasser. WOW. Thats just horrible. My dad's 2004 2500HD with the 6.0L gets 12mpg. Granted he has a heavy foot, and yeah it has tons of power, but 12mpg??? Thats the same gas mileage my 1984 carburated K5 got, and I drove like a maniac with that thing. I understand we are talking trucks, they will never be the gas misers that cars are(I'm likely going to hold onto my 37mpg Saturn after I get a new truck), but I think we could improve a few mpg over the years.

    The domestics could all use a good awakening IMO. They are trying to sell trucks based on all the options and power they have, they don't give a damn about fuel efficiency(one of the 2 things I actually give a F about, the other being power).
     
  11. mr_blasto

    mr_blasto 1/2 ton status

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    As previously mentioned, if you look at GM solely from their cars, it doesn't look that great. The competition is producing cars that outperform gm (probably better quality too), and they are selling them for less money. Strategically, the immediate future looks not so great.

    From a business standpoint they are also screwed. Because they are investing a lot in hydrogen technology which seems to be a total folly (Forbes just had an article about it). On top of that, they have guaranteed fixed figure benefits for retiree's. Which means that regardless of how the company is doing they must shell out an absurd amount of money to retired folk, rather than perhaps budgeting a percentage of profit for the year to this program so as to keep their budget balanced (or some similar solution). Not only that, but they are not taking these huge retirement liabilities into account on their financial report, and it is a very significant part of where the company is going. Before too long shareholders are going to demand that they properly account for these liabilities, and their stock is going to look worse than it already does.

    I do not purport to be nostra damus, and i do not know what will happen in the future with gm. I don't mean to be like chicken little as that is usually not my style. That is why in my first post i said that it will be interesting to see what happens over the next few years in the industry in general, but especially with gm. Take it for what it's worth.
     
  12. grimjaw

    grimjaw 1/2 ton status

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    I read that GM has 77 billion in debt. That is a major chuck of change.
     
  13. sled_dog

    sled_dog 1 ton status

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    If memory serves Ford is about the same. I have to wonder how long its been going like this. Remember after 9/11 Bush urged the car makers to keep up production and blah blah blah, I just wonder if that had any affect on all it.
     
  14. jekbrown

    jekbrown I am CK5 Premium Member GMOTM Winner Author

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    yeah, one of two things is going to happen with GM and the ball is in the court of the UAW.

    Scenario 1. UAW quits looking at the auto industry as UAW vs GM and starts looking at it more like UAW + GM > competition. End result, no more guarenteed pensions, retirees pensions are cut back via a United Airlines type court agreement, UAW members pay part of their healthcare costs and quit demanding $295457847 an hour for the same work a guy at an American-based Toyota plant is doing just as well for $20/hr. Believe it or not UAW, this is the GOOD scenario...

    Scenario 2. UAW keeps going down the path it is, shareholders call GM to account and their only option becomes cutting pensions off entirely, closing down all of its American manufacturing facilities (or more likely, selling them to someone smart enough to not hire UAW guys) in favor of plants in other countries. All UAW employees of GM are out of a job. Naturally, they will get on TV with sob stories about losing their jobs, blaming it all on 'big evil corporations'... and the left wing media who loves crime... I mean Union bosses will agree. All the while it was "the blue collar working man" who killed the goose laying the golden eggs, not the CEO or a big evil corp.

    j
     
  15. beater_k20

    beater_k20 Banned

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    odd, i priced out a few interior bits and pieces for my '77 a week or so ago, and they're available still, and even in stock at the localwarehouse. i guess my 30 year odl truck just blew your 10 year theory out of the water. most of the time the "discontinued" part is actually a part that has been superceded to a different part number, and the counter person is too lazy to find the new number.
     
  16. gone huntin

    gone huntin 1/2 ton status Premium Member

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    I needed an outer door handle for a '93 S-10 the other day so I called my local GM dealer a.k.a. Chuck Hutton Chevrolet. They claim to be the 2nd largest parts center for GM in the U.S. I was told that the part was no longer available. Now, just about every S-10 this bodystyle has at one time or another had a broken outer door handle, why would they discontinue an item that breaks so often? I worked for Nissan for 10 years as a tech and I could still get parts for a '68 Datsun 2000 from our parts dept.
     
  17. gzzgfw

    gzzgfw 1/2 ton status

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    As a GM Employee at Allison Transmission, I can honestly say GM Will not be bought by the Japanese.

    One word ITAR, International Trafficing Arms Regulations.

    GM simply owns and maintains too much defense related materials.

    In 1995, GM wanted to sell Allison transmission to ZF in Germany and since allison makes the M1A1Abhrams tank tranny the government intervened and said no.

    When you start seeing GM sell the Hummer plant and Allison tranmission then you might start suspecting something. I think that GM still holds some stock in United Defense still.

    I'm not buying Japanese speaking tapes yet! :)
     
  18. mr_blasto

    mr_blasto 1/2 ton status

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    I wonder how all that would work out if toyota decided to buy enough gm shares to have a controlling interest in the company?
     

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