Toyota may drop U.S. joint venture with GM

Toyota may drop U.S. joint venture with GM

Fri Jul 10, 2009 5:05pm EDT

DETROIT, July 10 (Reuters) – Toyota Motor Corp (7203.T: Quote, Profile, Research, Stock Buzz) said on Friday it would consider liquidating its stake in a California-based joint venture with General Motors Corp (GMGMQ.PK: Quote, Profile, Research, Stock Buzz) after the U.S. automaker pulled out of the venture.

Toyota has been mulling options for the Fremont, California auto plant — commonly known by its acronym NUMMI for the New United Motor Manufacturing Inc — since GM cut operating ties to the plant in late June.

GM and Toyota had been 50-50 partners in the northern California auto plant since 1984.

"We need to determine whether it can be economically feasible to contract with NUMMI without GM," Toyota said in a statement. "Under the current business circumstances, Toyota regrettably must also consider taking necessary steps to dissolve the joint venture."

Toyota spokesman Steve Curtis said the automaker hoped to make a decision on NUMMI "as soon as possible."

The news came as a new General Motors emerged from bankruptcy protection on Friday, by completing the sale of its best assets to a company funded by the U.S. Treasury.

The plant, which employees over 5,000 workers, builds the Corolla sedan and the Tacoma compact pickup truck for Toyota. The Pontiac Vibe — the only GM vehicle built at the plant — will go out of production in August under a previously announced plan by GM.

"NUMMI has been a model of U.S.-Japan industry collaboration as long as 25 years, but GM’s decision to abandon NUMMI and discontinue its production of the Pontiac Vibe have prompted a set of difficult and complex decisions for Toyota," Toyota said.

Toyota, which surpassed GM as the world’s top automaker in 2008, previously said it wanted to keep the joint venture and expressed disappointment at GM’s decision, and said it would consider whether to continue operating the plant on its own.

GM and Toyota set up the joint venture 25 years ago when both sides had a clear stake in its success.

The U.S. automaker was hoping to learn from Toyota’s "lean" manufacturing techniques, which minimizes waste and inventory to keep costs down. Toyota, meanwhile, needed a local production base at a time when Japan’s export boom was under scrutiny. (Reporting by Soyoung Kim and Chang-ran Kim; editing by Andre Grenon)


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