Worst Case Scenario? Toyota Buys GM
Beware - Paranoid Dream-Induced Ravings below:
First let me say straight off that this is not yet another article predicting the doom of General Motors. This is not something that I feel necessarily will happen or must happen to GM. Rather, it is based on past experience and conjecture of what potentially COULD happen in what for GM and Detroit fans might be considered a "Worst Case Scenario", and what - if you can stoop to the level of a conspiracy theorist for a few moments - one might consider Toyota to have been secretly planning for some time now.
Secondly, it is important to point out that I have little in the way of numbers or market research and even less knowledge of U.S. bankruptcy law to back up my theories, just a collection of observations, which I will list below. There are probably 5 counter-arguments to refute any one of my ideas, and if so, I'd love to hear them from you. In fact, I welcome all of YOUR ideas on how exactly this "Worst Case Scenario" might come to pass, and what GM might do to prevent it from happening. Also, if you are an open or a closet Toyota fan, you can tell us why it would be a great thing (not that I'm going to agree...).
Bankruptcy and financial woes make for a nice ripe target
Classic example: The GM takeover of Daewoo. GM was able to pick the company up for a fraction of what it was originally considered to be "worth", and was able to pick and choose what parts of Daewoo it wanted, and which it did not. In the theoretical world where Toyota=GM and GM=Daewoo, Toyota could decide to take Chevrolet and Cadillac, and dump much of the rest. Of course it would never be as simple as that, but the buyout of GM could easily lead to that over the course of several years. Would GM's Buick dealer contracts be any more meaningful than Daewoo's pre-buyout US dealerships that "got the shaft" so to speak? Or would a Toyota-GM merger make cutting the fat all that much easier?
Toyota not opposed to market domination
Many have made the argument of "Why would Toyota want GM?" Well, if they could pick and choose what they wanted, and eliminate or simply not buy the rest, the answer would seem simple: Market Penetration, and Market Share.
Japanese carmakers recently reached a milestone of 30 percent of U.S. auto sales. Toyota currently has 44% of the Japanese market. Toyota has been quoted as targeting 15 percent of the US auto market by 2010. What would bring Toyota to that point and beyond much more quickly? That's right, buying out one of its primary competitors.
"We'd like to be considered a 100-percent American company," Fujio Cho of the Japanese automaker's U.S. marketing strategy, 2005 (Per Detroit Free Press).
What better way to accomplish that than by taking hold of the most visible parts of GM, such as Chevrolet and Cadillac?
With the Beneficial Merger Partner image (despite initial cries of dismay) that Daimler-Chrysler currently projects, it is not impossible to imagine a similar partnering between Toyota and GM.
GM rapidly becoming an easier buyout target?
With GM's stock tanking and various debt issues, things often look bleak for the General these days.
GM's market value of $16.6 billion is now 1/8th the size of Toyota's. Toyota could "buy" GM right now, in theory, but better to bide its time and wait for darker days at GM to come.
A revitalized GM might help Toyota some day
A leaner, meaner GM, still in some level of control in regards to making US market and some world cars could, ironically, be a savior to Toyota some day. One look at Mercedes Benz, which is now leaning on Chrysler in ways that few people would have predicted when Chrysler was "merged" into DCX would seem to be a good example. GM Daewoo's resurgence as a maker of small cars for GM worldwide might be another good example of strength in a post takeover automaker.
NUMMI, Nova, Prizm, Vibe Pave the Way
I keep asking myself, "What is GM getting out of the anachronism that is NUMMI these days? A single Toyota-engineered car, the Vibe, to sell at Pontiac dealerships? Surely that can't be it."
There was a time when NUMMI made much more sense. Well, the idea did, even if the Toyota-engineered Chevrolet Nova is a little-loved car by GM fans today. And the idea was simple. Back when GM had a 45% share of the US market, Toyota didn't seem like a serious competitor, but it did have some serious ideas about manufacturing. In fact, some thought at the time that GM could only stand to further dominate the market after learning what NUMMI had to teach about "Lean Production", and what many now call the "Toyota Way". But those lessons were learned - or should have been learned - 20 some-odd years ago. So what does GM have to gain from NUMMI right now except how to place a Pontiac badge on a restyled Corolla wagon?
Let me put on my tin-foil hat and tell you that while GM sees itself as gaining a nice little Vibe from the deal, Toyota actually has more to gain from NUMMI than GM at this point. On the surface it would seem not to be so, given the short life-span of the NUMMI builtToyota Voltz, a virtual Vibe clone, almost down to the badging. But my crazy theory is, with continued connections like this to GM, it makes it easier for Toyota to be accepted some day as the takeover benefactor of GM in its time of financial woe.
Detroit and Michigan wait Eagerly with Open Arms?
Detroit is the center of Automotive Industry in the United States and naturally committed to throwing their support behind historically Detroit-based companies like GM and Ford over all others in a mutually beneficial symbiotic relationship, right? Well, Governor Granholm and many in Michigan sure don't seem to think so.
And given the way GM is squeezing its suppliers for more price cuts, it isn't hard to see why there might be an almost hostile attitude towards The General in the industry and in the state of Michigan.
Deploy Golden Parachutes!
Having worked for a large corporation that sold itself out to a competitor perceived to be a smaller player in our main business, I have seen the way corporate leaders in the United States can work. Just give them a nice enough package, write a few speeches for them to give that console the die-hard fans, and off they go to their next endeavor, leaving the detritus of their old company behind them to be gobbled up by the buyer while they sip mixed drinks in their corporate jets and chuckle about the inevitability of it all.
Still a Wild-eyed Conspiracy or Baseless Conjecture?
Perhaps there is nothing to my "Toyota secretly plans to take over GM" idea. Perhaps Toyota would be more satisfied taking the rest of the automotive world on, chipping away market share, bit by bit over a span of decades. But it sure seems that if Toyota wants it, market domination and massive market share is only a buyout away.
Finally, "What's so bad - so 'worst case' about this scenario?", some of the milder GM fans and Toyota fans might ask. It would mean the loss of another America based industrial icon to the global (yet in this case Japan-headquartered) economy. It would mean pride in GM's Detroit-based engineering prowess would become a thing for history books, or still alive in some sense, but heavily diluted by Toyota engineering. It would mean a "win" for Toyota, and GM defeated.
But enough of the doom and gloom. Tomorrow is a new day for GM, and a new chance to make a miraculous comeback and stun the automotive industry. Let's get behind GM and help make that happen...and dump my conspiracy theories into the waste bin of yesterday.
Beware - Paranoid Dream-Induced Ravings below:
First let me say straight off that this is not yet another article predicting the doom of General Motors. This is not something that I feel necessarily will happen or must happen to GM. Rather, it is based on past experience and conjecture of what potentially COULD happen in what for GM and Detroit fans might be considered a "Worst Case Scenario", and what - if you can stoop to the level of a conspiracy theorist for a few moments - one might consider Toyota to have been secretly planning for some time now.
Secondly, it is important to point out that I have little in the way of numbers or market research and even less knowledge of U.S. bankruptcy law to back up my theories, just a collection of observations, which I will list below. There are probably 5 counter-arguments to refute any one of my ideas, and if so, I'd love to hear them from you. In fact, I welcome all of YOUR ideas on how exactly this "Worst Case Scenario" might come to pass, and what GM might do to prevent it from happening. Also, if you are an open or a closet Toyota fan, you can tell us why it would be a great thing (not that I'm going to agree...).
Bankruptcy and financial woes make for a nice ripe target
Classic example: The GM takeover of Daewoo. GM was able to pick the company up for a fraction of what it was originally considered to be "worth", and was able to pick and choose what parts of Daewoo it wanted, and which it did not. In the theoretical world where Toyota=GM and GM=Daewoo, Toyota could decide to take Chevrolet and Cadillac, and dump much of the rest. Of course it would never be as simple as that, but the buyout of GM could easily lead to that over the course of several years. Would GM's Buick dealer contracts be any more meaningful than Daewoo's pre-buyout US dealerships that "got the shaft" so to speak? Or would a Toyota-GM merger make cutting the fat all that much easier?
Toyota not opposed to market domination
Many have made the argument of "Why would Toyota want GM?" Well, if they could pick and choose what they wanted, and eliminate or simply not buy the rest, the answer would seem simple: Market Penetration, and Market Share.
Japanese carmakers recently reached a milestone of 30 percent of U.S. auto sales. Toyota currently has 44% of the Japanese market. Toyota has been quoted as targeting 15 percent of the US auto market by 2010. What would bring Toyota to that point and beyond much more quickly? That's right, buying out one of its primary competitors.
"We'd like to be considered a 100-percent American company," Fujio Cho of the Japanese automaker's U.S. marketing strategy, 2005 (Per Detroit Free Press).
What better way to accomplish that than by taking hold of the most visible parts of GM, such as Chevrolet and Cadillac?
With the Beneficial Merger Partner image (despite initial cries of dismay) that Daimler-Chrysler currently projects, it is not impossible to imagine a similar partnering between Toyota and GM.
GM rapidly becoming an easier buyout target?
With GM's stock tanking and various debt issues, things often look bleak for the General these days.
GM's market value of $16.6 billion is now 1/8th the size of Toyota's. Toyota could "buy" GM right now, in theory, but better to bide its time and wait for darker days at GM to come.
A revitalized GM might help Toyota some day
A leaner, meaner GM, still in some level of control in regards to making US market and some world cars could, ironically, be a savior to Toyota some day. One look at Mercedes Benz, which is now leaning on Chrysler in ways that few people would have predicted when Chrysler was "merged" into DCX would seem to be a good example. GM Daewoo's resurgence as a maker of small cars for GM worldwide might be another good example of strength in a post takeover automaker.
NUMMI, Nova, Prizm, Vibe Pave the Way
I keep asking myself, "What is GM getting out of the anachronism that is NUMMI these days? A single Toyota-engineered car, the Vibe, to sell at Pontiac dealerships? Surely that can't be it."
There was a time when NUMMI made much more sense. Well, the idea did, even if the Toyota-engineered Chevrolet Nova is a little-loved car by GM fans today. And the idea was simple. Back when GM had a 45% share of the US market, Toyota didn't seem like a serious competitor, but it did have some serious ideas about manufacturing. In fact, some thought at the time that GM could only stand to further dominate the market after learning what NUMMI had to teach about "Lean Production", and what many now call the "Toyota Way". But those lessons were learned - or should have been learned - 20 some-odd years ago. So what does GM have to gain from NUMMI right now except how to place a Pontiac badge on a restyled Corolla wagon?
Let me put on my tin-foil hat and tell you that while GM sees itself as gaining a nice little Vibe from the deal, Toyota actually has more to gain from NUMMI than GM at this point. On the surface it would seem not to be so, given the short life-span of the NUMMI builtToyota Voltz, a virtual Vibe clone, almost down to the badging. But my crazy theory is, with continued connections like this to GM, it makes it easier for Toyota to be accepted some day as the takeover benefactor of GM in its time of financial woe.
Detroit and Michigan wait Eagerly with Open Arms?
Detroit is the center of Automotive Industry in the United States and naturally committed to throwing their support behind historically Detroit-based companies like GM and Ford over all others in a mutually beneficial symbiotic relationship, right? Well, Governor Granholm and many in Michigan sure don't seem to think so.
Which means, no favorites, no giving back to GM any more than Toyota. Door stands wide open. "Come on in, Toyota, we're ready."
And given the way GM is squeezing its suppliers for more price cuts, it isn't hard to see why there might be an almost hostile attitude towards The General in the industry and in the state of Michigan.
Deploy Golden Parachutes!
Having worked for a large corporation that sold itself out to a competitor perceived to be a smaller player in our main business, I have seen the way corporate leaders in the United States can work. Just give them a nice enough package, write a few speeches for them to give that console the die-hard fans, and off they go to their next endeavor, leaving the detritus of their old company behind them to be gobbled up by the buyer while they sip mixed drinks in their corporate jets and chuckle about the inevitability of it all.
Still a Wild-eyed Conspiracy or Baseless Conjecture?
Perhaps there is nothing to my "Toyota secretly plans to take over GM" idea. Perhaps Toyota would be more satisfied taking the rest of the automotive world on, chipping away market share, bit by bit over a span of decades. But it sure seems that if Toyota wants it, market domination and massive market share is only a buyout away.
Finally, "What's so bad - so 'worst case' about this scenario?", some of the milder GM fans and Toyota fans might ask. It would mean the loss of another America based industrial icon to the global (yet in this case Japan-headquartered) economy. It would mean pride in GM's Detroit-based engineering prowess would become a thing for history books, or still alive in some sense, but heavily diluted by Toyota engineering. It would mean a "win" for Toyota, and GM defeated.
But enough of the doom and gloom. Tomorrow is a new day for GM, and a new chance to make a miraculous comeback and stun the automotive industry. Let's get behind GM and help make that happen...and dump my conspiracy theories into the waste bin of yesterday.