12/1/2003 | 2 MINUTE READ

Toyota Takeover

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 A thought has been rolling around in my head, one both preposterous but plausible.


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 A thought has been rolling around in my head, one both preposterous but plausible. And it’s Toyota’s tenaciousness that makes me think it’s possible, especially as Toyota plans to control 15% of the global automotive market in the coming years. This is a goal that would necessitate the addition of two million units to its already strong sales, and that will not come without a major acquisition or joint venture.

Buying the remaining small, weak players in the world market would ratchet-up Toyota’s market share, but they wouldn’t give it the specific gravity to go toe-to-toe with GM. That would require a meatier purchase, or a long-term joint venture that cedes management control over time to Toyota in exchange for higher profits and a boatload of cash. One that lets management claim its “brilliance” ensured the long-term survival of the partner corporation.

Unlike Daimler Benz, Toyota is very sensitive to the appearance of a takeover, and the need to sell this marriage as a win-win for all involved. If times are tough, positioning the deal as a cash/management/technology infusion designed to return its partner to health would mitigate much of the fear and confusion that surround such endeavors. And it would make Toyota a good neighbor coming to the aid of a fellow automaker, rather than a corporate colossus intent on devouring all who lie before it.

If times are good, the deal depends on the willingness of the partner to sign on to a strategy that replaces the accustomed boom-and-bust cycles with an arrangement that gives shareholders a consequential cash return and steady dividends. It would necessitate the abandonment of any pretense of fighting back alone, or replacing the current business-logic culture with a more warrior-like personality, one that strives to innovate in order to keep ahead.

There are a lot of things that could destroy these scenarios. A national government could decide that it was better to prop up the company rather than let it fall into foreign hands. Toyota could make some missteps while its potential partner moves from strength to strength, making it far more difficult for it to swallow the revitalized target. Public outcry could force Toyota to rethink its strategy entirely, possibly abandoning this tack for one less open to public scorn. There are any number of scenarios that make this plan obsolete, each well within the realm of possibility.

However, Toyota’s drive to equal, then pass, General Motors won’t go away. It is nothing if not tenacious, and has shown incredible patience when pursuing its prey. Failure is not an option, though success may take years. And it is this single-mindedness, coupled with the competitive landscape, that makes a takeover all the more likely. The only question that remains is: “When will it happen?”

Currently, it’s cheaper to build cars and trucks at a loss than to unload industrial property. It’s cheaper still to borrow platforms from overseas divisions than it is to support the design and engineering staff necessary to develop these vehicles in North America. And it doesn’t take much to imagine a day when William Clay Ford, Sr.—the last living tie to the founding Fords—is gone, and the nearly 200 offspring supported by this global concern are more interested in profits than in making the sacrifices necessary to keep their legacy independent. A takeover of Ford by Toyota may be a long-shot, but it’s not an impossibility.