Credit Suisse in Japan.
Japan's auto industry experienced similar trouble when a magnitude-6.8 earthquake struck HYPERLINK "http://search.japantimes.co.jp/cgi-... "http%3A%2F%2Fsearch.japantimes.co.j... Prefecture in July 2007, halting piston-ring maker Riken Corp.'s plant in Kashiwazaki. The trouble at Riken forced major automakers to idle some of their factories due to a lack of parts.
Analysts have said Japanese carmakers must hedge their bets by procuring each part from more than two different parts makers, but it is difficult to do that with each of the 30,000 to 60,000 parts needed to build a vehicle.
The question now is: How much more can Toyota do to shore up GM's finances?
In 2005, Toyota bought an 8.7 percent stake in HYPERLINK "http://search.japantimes.co.jp/cgi-... "http%3A%2F%2Fsearch.japantimes.co.j... Heavy Industries, maker of the Subaru brand, when GM sold off its 20 percent stake. Toyota later increased that stake to 17 percent when Fuji Heavy conducted a third-party share allocation last year.
In 2006, Toyota bought 5.9 percent of Isuzu Motors after GM dumped its stake the same year.
Yasuo Tsuchiya, a visiting professor at HYPERLINK "http://search.japantimes.co.jp/cgi-... "http%3A%2F%2Fsearch.japantimes.co.j... University who specializes in global management and industrial globalization, said aggressive steps, such as a capital tieup, joint venture or technology offer, are unlikely because Toyota has no incentive to do so.
Toyota itself appears cool to the idea of financing struggling U.S. automakers.
"Merely providing financing won't solve anything. We need to do something that can stimulate the overall market," one Toyota executive said on condition of anonymity. He did not elaborate.
HYPERLINK "http://search.japantimes.co.jp/cgi-... "http%3A%2F%2Fsearch.japantimes.co.j... Kobayashi, an analyst at Standard and Poor's in Japan, said, "Any support (by Toyota) would not be economically rational in the current business environment."
Kobayashi said Toyota will not want to acquire new plants because it wants to minimize inventories amid the ongoing plunge in global car sales, so the chance of it buying such assets from GM or Chrysler is also slim.
The Toyota group is in the middle of its own cost-cutting efforts after announcing Feb. 6 that it expects a ¥450 billion operating loss and a ¥350 billion net loss for the year ending March 31, which would be its biggest losses since its establishment in 1937.
The relatively high labor and medical costs plaguing the U.S. automakers would also be a heavy burden on Toyota if it were to acquire their plants. According to The Wall Street Journal, GM's labor and medical costs average $81.18 per hour per worker, compared with $47 per hour at Toyota's North American plants as of 2006.
Thus, any step by Toyota to support its ailing U.S. rivals is likely to be a very limited one.
One possibility would be to purchase the rest of the New United Motor Manufacturing Inc. (NUMMI) plant in HYPERLINK "http://search.japantimes.co.jp/cgi-... "http%3A%2F%2Fsearch.japantimes.co.j... Calif., since Toyota already owns half the stake, said Tsuchiya of Meiji University. NUMMI, which produces the Corolla, was jointly set up with GM in 1984.
Jointly developing completely new technology for next-generation vehicles, such as fuel-cell vehicles and electric cars, is another area Toyota might be considering, Tsuchiya said.
Experts say that if any of the big U.S. automakers go bankrupt, the government might move to protect the U.S. market and impose tariffs on Japanese cars. Also, U.S. consumers may boycott Japanese cars and shun foreign brands amid the crisis, they said.
"Toyota has always been sensitive to any trade friction with the United States or any movement to boycott Japanese cars," Tsuchiya said. "Because of those concerns, it is possible for Toyota to consider taking some steps to support them."
But that would probably only occur at the request of the HYPERLINK "http://search.japantimes.co.jp/cgi-... "http%3A%2F%2Fsearch.japantimes.co.j... government, he said, because Toyota doesn't have enough motivation to actually entertain such aggressive steps.
"The question is whether such a request will really come," he said
