Toyota Motor Corp. is considering offering the company’s core technology for hybrid vehicles to struggling General Motors Corp. of the United States, it has been learned.
The possible move comes on the back of speculation that GM will soon file for Chapter 11 bankruptcy at the U.S. Bankruptcy Court.
According to sources, Toyota is essentially ready to provide the technology if GM asks it to do so, even if the U.S. firm becomes subject to the Federal Bankruptcy Code.
The technology Toyota is considering providing to GM is patented technology for increasing fuel economy by controlling the movement of the engine and the motor. The technology is used in the Prius and some other Toyota vehicles. Fuel economy using Toyota technology far exceeds that achievable with technology developed by GM.
One reason seen behind GM’s current travails is that the company fell behind in the field of environment-friendly technologies, which, coupled with spiraling gasoline prices caused by high oil prices in the first half of 2008, resulted in a sharp fall in sales of large gas-guzzling vehicles.
Toyota is therefore considering offering indirect support for GM’s reconstruction by providing the company with its hybrid vehicle technology. Toyota, for its part, would benefit by having its hybrid technology effectively become the de facto world standard.
In addition, sources said Toyota sees potential in such a move for easing any potential recurrence of Japan-U.S. tensions in the auto industry as successive major U.S. carmakers plunge into financial crisis.
Another consideration in offering the technology to GM is said to be Toyota’s desire to prevent a further weakening of the North American market.
If GM’s reconstruction fails, huge numbers of jobs will be lost, which could lead to a further decline in the U.S. market where the sales of new cars has fallen to the 9 million level at an annualized rate.
U.S. vehicle parts manufacturers that supply parts to Toyota also supply parts to GM and other companies, meaning the problems affecting GM could have repercussions on Toyota, including on the firm’s manufacturing and sales operations in North America.
Toyota and GM have not formed a capital alliance, but do have cooperative relations. For example, they are partners in a joint venture for manufacturing small cars in the United States.
GM is said to have fallen behind in hybrid technology as it prioritized developing vehicles powered by fuel cells, which are seen by some as having the potential for creating the ultimate low-pollution cars.
Toyota is expected to post losses for two consecutive years, with its operating profit expected to be 850 billion yen in the red in the consolidated settlement of accounts in fiscal 2009.
While the Japanese market continues to struggle, rejuvenation of the North American market is seen as essential for Toyota, according to a senior executive of the company.