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GM, Toyota Ask to Extend Joint Venture : Autos: Request to keep Bay Area plant open beyond 1996 surprises analysts, who expected Toyota to buy out GM.

June 29, 1993|DONALD W. NAUSS | TIMES STAFF WRITER

DETROIT — General Motors Corp. and Toyota Motor Co. said Monday they are asking the federal government to set aside an order that would disband their joint car-making venture in the Bay Area in 1996.

The move to keep New United Motor Manufacturing Inc. alive indefinitely came as a surprise to some analysts, who had expected Toyota to buy out its struggling partner as the Japanese auto maker sought to expand production in the United States.

But an effort by Toyota to take control of Nummi's Fremont operations could have inflamed already high trade tensions, particularly if seen as cutting into GM's already shrinking market share.

"This is a politically correct move on Toyota's part," said Chris Cedergren, an analyst with Santa Ana-based AutoPacific Group.

A Nummi official said the 50-50 joint venture has benefited both car makers. Toyota gained access to a U.S. production facility at a reasonable cost; GM learned Japan's lean production techniques firsthand.

"It made more business sense to continue the joint venture," said Dennis Cuneio, vice president of corporate planning for Nummi.

The Fremont plant makes Toyota Corolla and Geo Prizm small cars, as well as compact Toyota pickup trucks.

Under the original agreement, Nummi was to last for 12 years and expire in late 1996. Any extension of the agreement must be approved by the Federal Trade Commission.

Cedergren said Toyota is likely to build more facilities in North America, as it is in Georgetown, Ky. A plant already exists in Cambridge, Ontario.

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