Monday, October 17, 2005

GM executive says partnerships with Isuzu, Suzuki remain solid

By Yuri Kageyama / Associated Press

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TOKYO -- General Motors' partnerships with Japanese automakers Isuzu and Suzuki remain solid despite the world's biggest automaker's decision to end its alliance with Subaru carmaker Fuji Heavy Industries, a senior GM executive said Monday.

Larry Burns, vice president overseeing research and development at General Motors Corp., acknowledged that hopes for "synergies" or advantages from a partnership with Fuji Heavy Industries failed to bear fruit.

But Detroit-based GM's other Japan alliances -- with truckmaker Isuzu Motors Ltd. and Suzuki Motor Corp., which makes small cars -- remain strong, both as ways to share technology and to sell cars in Japan, Burns said during a trip here to speak at an international conference about the auto industry and attend the Tokyo auto show.

Earlier this month, GM ended its partnership with Fuji Heavy, deciding to sell its entire 20 percent stake in Fuji. Toyota Motor Corp. agreed to buy an 8.7 percent stake in Fuji Heavy for 35.4 billion yen, or about $315 million. There has been some speculation that GM may also decide to drop its other Japan alliances.

"Those are very strong relationships," Burns said in an interview at GM's Tokyo office, adding that Isuzu is important in diesel technology, and GM has a fuel-cell technology partnership with Suzuki.

Burns denied Toyota's purchase of a part of GM's shares in Fuji Heavy was a helpful gesture to GM as some media reports have speculated.

The move comes as GM's U.S. market share fell by 1 percent in the first nine months of this year. It lost more than $1.3 billion in the first half of this year and its credit ratings are in "junk" territory.

Meanwhile, Toyota, the world's second largest automaker, is increasing global sales. The automaker, based in Toyota city, reported its best ever fiscal year profit of 1.17 trillion yen ($10.3 billion) for the year ended March 2005 as sales grew in North America, Europe, Japan and the rest of Asia.

Some Toyota officials have expressed fears of a backlash for Toyota's success, reminiscent of the trade friction in the United States in the 1980s and early 1990s.

"Toyota is a company that competes ruthlessly around the world as does General Motors," Burns said. "None of us are in the business of bailing each other out."

Toyota has recently raised prices on several U.S. models. The move followed comments from Toyota Chairman Hiroshi Okuda that U.S. model prices may be raised to fend off a possible political backlash.

Burns reiterated that GM believes that currency manipulation by Japan to boost the yen is giving Japanese automakers an unfair edge in the U.S. auto market.

A strong yen generally helps Japanese automakers by making their products cheaper when converted into dollars as well as by boosting the value of their overseas earnings when converted into yen.

"Those are serious issues. We believe in fair competition," said Burns.

Toyota and GM have been in talks over the last several years to work together on ecological technology, but no specific projects have been announced.