Wild Ass Rumor of the Day – Toyota to Bailout GM
In a break with TTAC tradition, today’s WAR comes from an “authoritative” source: Reuters. OK, it’s Kyodo news via Reuters. (Free marketeer that I am, I’m not so sure I trust a “nonprofit cooperative news agency.”) “The Kyodo news report said Toyota was expected to consider quick fixes for the cash-strapped GM, including buying up its assets and helping it secure sufficient business funds. The executives of the world’s two biggest automakers may also discuss an expanded business partnership, including Toyota making fuel-efficient compact cars for GM and providing hybrid-car technologies to the U.S. carmaker, Kyodo said, citing sources.” Obviously, this is complete and utter nonsense. Except that maybe it isn’t. If you recall, the last time GM was staring down the barrel of C11, back in May 2005, Rick Wagoner DID hop a Gulfstream for Tokyo and met with then-Toyota President Fujio Cho. The nature of those discussions was never revealed. (Until now: Pachinko!) Students of these turbulent times may also remember that Toyota offered to raise its prices to help GM (I shit you not). As TTAC has pointed out many times, GM’s survival is in Toyota’s best interest; the American automaker sets a profitable “floor” for all U.S. new car prices. This is definitely a rumor worth watching.
Why Wild Ass? I've seen whackier: - Daimler buys Chrysler - Cerberus buys Chrysler - Porsche buys VW - VW buys parts from GM as pennance for Lopez Toyota snapping (or propping) up GM, Chrysler et al before the gummint gets its hands on them makes more sense than any of the above. Toyota fighting against GM? Easy. Japan fighting Washington? Well, it's been tried before. It's not a question whether another company could buy GM and the kitchen sink. At current stock valuations, Porsche could finance a GM buyout with a few option trades. The trouble is: Nobody wants them. PS: I don't think a Toyota / GM merger would faze the Euro regulators. Neither dominate the European marketplace.
So is Wagoner going to have to crawl through that same doggy door that Homer went through to beg for his old job at the nuclear plant? Sorry that obscure Simpsons reference came to me as I read this.
I don't think that many of the initial posters get it... I highly doubt there would be any sort of corporate merger or aquisition of the whole (or large part) of GM - with GM comes lots of headaches... - and the a big drag, as you're then responsible for such headaches - ie - union workers, their contracts, healthcare and pensions, etc... But - pumping in a billion or 15 makes sense... either with visible partnerships such as platform / technology / logistics sharing or invisible partnerships... Like the original post says - gm helps to set the price floor, which helps everybody make more money (in theory)...
Don't forget this scenario: If GM (and Chrysler) stay afloat, they can continue to supply the rental (and ultimately the late model used) market. I don't know if Ford has learned the lesson of how rental business affects resale values or not, but Toyondissan certainly have. If there's no GM or Chrysler to fill the rental role, Hyundai and Kia fill the gap. Not Good for Toyota, and they would be suicidal to allow that to happen.