General Motors Corp. and Toyota Motor Co. have begun preliminary talks on possible joint production of a small cars in this country, the two companies said yesterday.
Officials of the two companies confirmed that the possibility of a partnership was discussed last Monday by GM Chairman Roger B. Smith and Toyota President Eiji Toyoda at a meeting in New York City. According to Toyota, the two companies have "committed themselves to give further consideration to this possibility," but officials of both sides indicated that the talks were just beginning, and the outcome was impossible to predict.
No timetable for further meetings was announced.
Political and economic pressures have pushed the two auto giants toward one another. Japan has come under heightened pressure from this country to reduce its trade surplus with the United States or face retaliation, and the opening of U.S. production plants would be one answer to the criticism.
American trade officials, auto company executives and union leaders have pressured Japanese auto companies to move some production here, and high-level meetings between American and Japanese government representatives are being held in Tokyo this week on demands that Japan open its markets wider to more foreign goods.
GM, for its part, has been meeting with two other Japanese companies, Isuzu Motor Co. and Suzuki Motor Co., to discuss possible production of small Japanese-built cars for sale by GM. These negotiations, if they succeed, would free GM from the cost of producing a successor to its Chevette subcompacts and developing a new, smaller mini-compact car, enabling it to concentrate investments on other models. GM owns stock in both Japanese companies.
A GM spokesmen said the negotiations with Isuzu and Suzuki are continuing.
The contact between Toyota and GM followed the collapse last summer of talks between Ford Motor Co. and the Japanese auto producer about a possible joint venture.
A leading Japanese newspaper, Nihon Keizai Shimbun, which disclosed the meeting between Smith and Toyoda, said GM took the initative. The Japanese auto company decided to begin negotiations in light of the mounting trade friction between the United States and Japan, which has clouded long-term prospects for continued expansion of exports to Toyota's key overseas market, the Japanese newspaper reported yesterday.
Its front-page report said that GM proposed manufacture of 500,000 subcompacts developed by Toyota at one of GM's recently idled production plants, details that GM would not discuss.
A GM spokesman said, however, that Toyota asked for the meeting with Smith, following an initial approach in December.
In the past, the No. 1 Japanese automaker has not been interested in producing cars in the United States, setting itself apart from Honda Motors, which is scheduled to complete a car plant near Columbus, Ohio, later this year, and Nissan Motors, which is building a truck plant in Smyrna, Tenn.
Growing resistance to Japanese vehicles in the United States and other foreign markets has forced Toyota to look again at overseas production.
Toyota's reluctance to build vehicles in the United States has centered on U.S. labor costs, which are considerably higher than those in Japan. If an overseas plant is to be built, Taiwan is a much more attractive site, according to Shoichiro Toyoda, president of Toyota Motor Sales, the company's marketing division, in a recent interview.
However, if U.S. labor costs are reduced significantly in the current round of bargaining, Toyota might reconsider its position, Toyoda said. The United Auto Workers union is considering whether to reopen negotiations with GM on reducing labor costs.
In a related development, unconfirmed press reports in Japan yesterday said that Japanese trade officials have decided to limit Japanese car exports to the United States to 1.68 million in the fiscal year beginning April 1, maintaining the voluntary limits adopted by Japan for the fiscal year that ends this month.