Toyota and Ford Explore Alliance Amid Industry Shifts

Strategic Insights -

Toyota, the world's second-largest automaker, and Ford Motor Co. are engaging in discussions about a potential alliance to strengthen their ties in the development of environment-friendly technologies and compact cars. The meeting between Toyota Chairman Fujio Cho and Ford President Alan Mulally came as the industry is undergoing significant changes, with Toyota poised to overtake General Motors as the world's top automaker in 2007.

Key Takeaways:

  • Toyota and Ford are exploring a potential alliance to boost their collaboration in environment-friendly technologies and compact cars.
  • The meeting between Toyota Chairman Fujio Cho and Ford President Alan Mulally is seen as a move towards a global reconfiguration of the auto industry.
  • Toyota is concerned about the earnings disparity between it and US rivals, fearing it could lead to trade friction between Japan and the US.
  • The alliance between Toyota and Ford could help the latter accelerate its business reconstruction with Toyota's cutting-edge environment-friendly technologies and efficient production know-how.
  • Toyota and Ford may discuss a joint development of compact cars, with a potential focus on fuel efficiency.
  • Toyota has formed closer ties with Japanese automakers that used to be owned partially by GM, including acquiring a 5.9% stake in Isuzu Motors in May this year.
  • The alliance is seen as a potential response to Toyota's concern about maintaining friendly relations with the US auto industry.

Statistics:

  • Toyota's global sales target for 2007: 9.34 million units, up 6% from 2006.
  • Toyota's output target for 2007: 9.42 million units.
  • GM's vehicle sales in 2005: 9.17 million units.
  • Ford's net loss for the July-September period: $5.8 billion.
  • Ford's market share in the US market: 16.8% in 2005.

Sources:

  • Toyota Motor Corp. Chairman Fujio Cho
  • Toyota President Katsuaki Watanabe
  • Ford Motor Co. President Alan Mulally
  • Kyodo News International
  • McClatchy-Tribune Business News
  • Automotive News
  • Business Week
  • Bloomberg
  • Reuters