Perspectives on GM, Toyota, and the Future of the Auto Industry By Vivien Ng, MBA ‘09 On April 6, 2009, the Center on Japanese Economy and Business organized a symposium titled “Two Behemoths in a Troubled Industry: Toyota and GM.” The speakers were Steven Sturm, Group Vice President of Americas Strategic Research and Planning and Corporate Communications at Toyota Motor North America, and William Holstein, author of Why GM Matters: Inside the Race to Transform an American Icon. The discussion was moderated by David Weinstein, Carl S. Shoup Professor of the Japanese Economy at Columbia University, and Professor Hugh Patrick, director of the Center on Japanese Economy and Business, served as commentator. The symposium was cosponsored by Columbia Business School’s Asian Business Association, General Management Association, and Japan Business Association. The auto industry bailout has been controversial and the debate among the speakers and the audience touched on the importance of GM to the U.S. economy and the likelihood that GM can be a viable company, as well as Toyota’s strategy and the industry’s move towards more fuel efficient vehicles. GM is on the “successful rebound” against competitors like Toyota if the U.S. government helps them get past this difficult economic period, said Mr. Holstein. “GM matters because they represent 1 percent of the GNP,” he said, adding that each line job supported a mass infrastructure of jobs, including those in other industries such as technology, logistics, and advertising. Mr. Holstein strongly disagreed with the decision of the Obama administration to fire GM’s CEO, Rick Wagoner, and he argued that Wagoner has been instrumental in many decisions that have transformed the company. According to Mr. Holstein, the primary reason for GM’s current trouble is the economic downturn, and he said the U.S. government should take this into consideration when deciding what to do with GM. If properly supported by the U.S. government, Mr. Holstein was confident that GM would again be a leader in the auto industry.   Mr. Sturm stressed the importance of the auto industry to the U.S. and the global economy.  He noted restoring health to the industry requires reviving consumer confidence and addressing the health of auto suppliers and dealers. While Mr. Strum said he does not expect the industry to turnaround quickly due to the depth of the recession, he anticipated it would happen around 2010 or 2011. He said Toyota is still spending significantly on research and development in new hybrid, hybrid plug-in, electric, and hydrogen fuel cell technologies. By 2015, Mr. Strum said Toyota expects to bring a hydrogen fuel cell vehicle to market, and by 2020, Toyota is committed to offering a hybrid option for all cars and most light trucks. “As always, we operate on a long-term view,” said Strum. Professor Patrick underscored Mr. Holstein’s point that GM has made significant progress toward leaner production, improved productivity, new designs, and promising lithium-ion battery technology. While Professor Patrick observed that “a downsized GM can be and will be competitive,” and “transformation process had been too slow, and the restructuring had not been deep enough.” He further suggested that because the U.S. government has had to step in to help GM avoid bankruptcy and liquidation, how the GM matter is resolved is primarily a political issue, and less about economics of the business. From Toyota’s perspective, Professor Patrick noted that reduced competition is not all positive. “The downsizing of GM creates great economic opportunities for Toyota, but also huge political risks,” said Professor Patrick. If Toyota’s market share in the U.S. grows to 30 to 40 percent, they may face “tremendous pressure” to move more of their manufacturing operations and sourcing to the U.S, perhaps at the expense of production in Japan.