Case Study (Category A-Budding Case Writer)
Why Toyota wants GM to be saved-An auto bailout
Detroit's Big Three- An auto bailout
Detroit's Big Three was not the only automotive companies that want the government to come up with the much awaited financial help. Most prominent overseas automakers, Toyota Motor, recommended some form of federal aid to keep General Motors (GM, Fortune 500), Chrysler LLC and possibly Ford Motor (F, Fortune 500) out of bankruptcy. Toyota Motor (TM) spokeswoman Mira Sleilati said that they support Bush administration’s intention to provide the automakers help from the $700 billion approved to bail out banks and Wall Street firms because they “just want a strong, competitive healthy industry." It seemed surprising at first instance, but later made sense after taking a closer look at the dynamics of the auto industry and the intertwined fates of its companies. Toyota, Honda Motor (HMC) and other Asian auto manufacturers firmly believed that they would be all better off if GM and Chrysler survive. Majority of overseas automakers manufacture over 3 million vehicles a year at U.S. plants and were apprehensive about their production if one of the U.S. automakers collapsed. Auto parts supplier industry were most likely to bear the brunt of Big Three fiasco reason being that majority of parts in an automobile industry are produced by a single supplier .The disturbances in production could persistent for long time and Toyota might take months together to work through that and resume normal production. Many dealers who were engaged in selling both U.S. and overseas auto brands could possibly ruin their overseas manufacturers' dealer network and sales. It would be a severe hit to the traumatized U.S. economy that would further narrow down the demand for U.S. auto sales, which hit a 26-year low in November 2008. The Overseas automakers decided not to let US Economy slow down further. US being the largest market for Toyota, Honda and...
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