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Wednesday, July 1, 2009

GM ends NUMMI deal with Toyota


Staff writer

Bankrupt auto giant General Motors Corp. said in the United States on Monday that it will pull out of the New United Motor Manufacturing Inc. joint venture with Toyota Motor Corp. and stop producing the Pontiac Vibe at the plant in August.

"As part of its long-term viability plan, General Motors has decided that its ownership stake in the New United Motor Manufacturing Inc. joint venture with Toyota will not be a part of the 'New GM,' " Troy Clarke, president of General Motors North America, said in a statement.

"After extensive analysis, GM and Toyota could not reach an agreement on a future product plan that made sense for all parties. Accordingly, NUMMI will end production of vehicles for GM in August, and there are no future GM vehicles planned for the joint venture at this time," he said.

Toyota had earlier said it hoped to continue the 50-50 venture, which produced 10,000 Corollas, 2,000 Tacoma trucks and 6,000 Vibes in May.

"Toyota is sorry that General Motors has chosen to withdraw from the NUMMI joint venture, ending a long, successful partnership spanning 25 years," Toyota spokesman Hideaki Homma said.

"While we respect this decision by GM, the business environment surrounding Toyota is extremely severe and this decision by GM will make the situation even more difficult for Toyota," Homma said.

"We are going to consider our response after taking various viewpoints into account."

There had been much speculation surrounding the plant in Fremont, Calif., after GM decided earlier this year to phase out the Pontiac brand.

Experts said Toyota is likely to take over the iconic joint venture set up in 1984 amid Japan-U.S. trade friction.

"There are about 4,000 workers at NUMMI, and Toyota will need to protect their jobs," under the strong influence of the United Auto Workers, said Mamoru Kato, senior analyst at Tokai Tokyo Research Center Co.

Kato said GM's withdrawal from NUMMI is likely to be a short-term burden on Toyota, as it will need to buy the remaining half of the joint venture and pay for the excessive facilities and labor.

Yasuaki Iwamoto, an auto industry analyst at Okasan Securities Co., said a forced takeover won't necessarily be a burden as long as any new models produced are similar to the Corolla and Tacoma.

As long as it turns out similar models, the plant will not need additional investment, he said.

"I expect Toyota to fill in the production capacity with other Toyota models" after the decision by GM, Iwamoto said. "The production of the Pontiac Vibe at NUMMI is limited and there would be little impact on Toyota."

Despite the experts' outlook, some media reports later in the day said Toyota was not ruling out shutting down the plant, quoting an unidentified senior Toyota official. "A shutdown is an option," the official reportedly said.

The reports said Toyota will reach a decision in July before GM ends production of the Pontiac Vibe in August.



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