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Toyota Could Buy GM if it wants!

Toyota Is Way Too Smart to Bid for General Motors: Doron Levin
March 17 (Bloomberg) -- As General Motors Corp. slides deeper into financial distress, it's tempting to imagine rival Toyota Motor Corp. riding in to end GM's miseries by buying it.

Toyota would instantly vault to No. 1 in the world from No. 2. Then it could transfuse its proven genius for manufacturing into GM, making the automaker's factories competitive, while bringing hope to workers in crumbling U.S. communities like Flint, Michigan, and Anderson, Indiana.

Amid the nostalgic tears over GM's demise, Toyota would win kudos from the knowledgeable few who understand that more efficient methods of business and management inevitably drive out the old and outmoded, thereby creating value. (President George W. Bush has already ruled out a U.S. government bailout for troubled U.S. automakers.)

And maybe, since we're fantasizing, Honda Motor Co. might decide to buy and restructure Ford Motor Co., allaying the anxiety that stalks Ford's hometown of Dearborn, Michigan. Such an acquisition would be fraught with irony, of course, since the late Henry Ford II famously vetoed the not-so-dumb idea of installing engines from then-newcomer Honda in Ford cars.

Just Imagine

Toyota's market capitalization of $194.7 billion, combined with the auto industry's only AAA credit rating, permits the Japanese automaker to buy GM, should it choose, with less strain than a whale needs to swallow a herring. GM's market capitalization of $12.4 billion, about the same as chocolate maker Hershey Co., and junk-bond credit rating are tantamount to a for-sale sign.

So why not imagine it? The public has watched, time and again, as successful, growing enterprises devour weaker competitors.

But back to the reality of today's auto industry. Detroit's managers and experienced Wall Streeters know why Toyota, with all its financial clout and credibility, will never acquire GM: Poison pills, in the form of massive GM health-care and pension liabilities, plus a grossly non-competitive U.S. labor contract with the United Auto Workers union. (Honda won't touch Ford for the same reasons.)

Another major hurdle to a Toyota-GM rescue: Culture. Toyota's self-sufficient, deliberate and cost-conscious operations are the diametric opposite of GM's.

Bigger, Slower

Toyota would be weakened and slowed down by ingesting GM, which tends to overspend, overanalyze and appoint too many bosses. The U.S. automaker, unable to grow by dint of its own labors, has squandered untold billions on well-intentioned purchases of technologies and on alliances with others. The result has been mostly large write-offs and wasted time.

This week, by contrast, Toyota joined forces with Subaru, GM's erstwhile ally. Toyota will build Camry sedans at Fuji Heavy Industry Ltd.'s Subaru plant in Lafayette, Indiana, while investing a modest $230 million to upgrade the plant.

Fuji and GM had been partners until last October, when Toyota bought 8.7 percent of Fuji from GM for $315 million. GM had recognized Subaru's strengths, but somehow could never capitalize.

In its venture with Fuji, GM in 2004 introduced a restyled version of Subaru's highly-rated WRX sedan as the Saab 9-2X. The 9-2X -- nicknamed the Saabaru by some -- flopped in the U.S., selling fewer than 6,000 last year. Troy Clarke, president of GM Asia Pacific, announced in October that ``there were not enough collaborative projects to sustain an alliance'' between GM and Fuji.

YUK, YUK and more YUK!

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Besides the labor and pension problems, GM has too many divisions and is over dealered. I could see an investment firm like KKR or even Warren Buffet coming in after they get the labor and pension issues resolved. The dealer issue is probably a bigger hurdle than the pensions. Cadillac is the one shining star in all of GM, who would have thought that 10 years ago.

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Where's the advertising?

Has anyone else noticed that NONE of the XLR's features are EVER advertised?

Before they file for bankruptcy, how about SELLING THE BENEFITS? Basic sales 101.

I know all about the Lexus's turning headlights from their ads--Caddy thinks they've hit the sky with 10 seconds at the Super Bowl--what do they spend, 1/100th of Mercedes or the Japanese's ad budget?

They've (Caddy) got the product--now keep it a secret!

WAKE UP CADDY/GM!:banghead

(This from a Suburban, Hummer & XLR owner).

--Bob (Dadonator)
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