As Toyota Grows, So Do Its Challenges

Japanese automaker Toyota represents a big problem for the Big Three U.S. automakers, as its sales grow in both U.S. and world markets. But as the company expands, it must also maintain the quality and consistency of its previous cars.

Melissa Block talks with David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich.

Toyota has three marques: Toyota, Lexus and Scion. The company also owns Hino, a truck company, Daihatsu, a small Japanese marque, as well as small parts of Isuzu and Subaru.

Big Three Automakers Discuss Woes with Bush

Detroit-based auto industry leaders met with President Bush and Vice President Dick Cheney on Tuesday to press their concerns about health care and trade issues. But they insisted that the troubled industry does not want a federal bailout similar to the 1979 measure approved by Congress that helped preserve Chrysler Corp.

Instead, in an Oval Office meeting that lasted just over an hour, auto executives discussed the major challenges facing their industry: the spiraling costs of health care for auto workers; the advantages Japanese automakers have because of a weak yen; and their work to develop alternative-fuel vehicles.

"We found a lot in common," President Bush said after the meeting, during which he promised an "ongoing dialogue" between government and industry.

The meeting came hours before the president's departure for Asia and a meeting in Vietnam with Asia-Pacific economic partners. The message he will give those partners, Bush said, is "just treat us like we treat you."

Bush's session with General Motors' Rick Wagoner, Ford's Alan Mulally and Chrysler Group's Tom LaSorda follows months of scheduling conflicts and delays.

All Big Three automakers are struggling. Ford, the nation's second-biggest automaker, posted a $5.8 billion third-quarter loss — its largest in more than 14 years. GM reported a loss of $91 million in the third quarter, a sign of improvement after posting a $1.6 billion loss during the same period last year. Both companies are heavily downsizing; combined, they are offering early retirement or buyout plans to more than 100,000 U.S. workers. Chrysler Group had a $1.5 billion third-quarter loss, but it was helped by profits at its parent company, DaimlerChrysler.

A look at the issues on U.S. automakers' agenda:

Health Care: All three automakers spend more on health care per vehicle than on steel, which adds about $1,000 to the cost of a car built by the Big Three. GM, the nation's largest private provider of health care, spent $5.3 billion on health care last year for 1.1 million employees, retirees and their dependents. Last summer, GM chief Wagoner urged Congress to provide a "vigorous and robust" prescription-drug market, develop national health information technology and focus on high-cost, catastrophic cases among a small number of patients.

Trade: The automakers have also sought support on trade, arguing that Japan has artificially weakened the yen, allowing Japanese automakers to price their vehicles more aggressively in the United States and offer more options. Last year, GM's chief economist told the House Ways and Means Committee that this alleged currency manipulation gave Japanese automakers a "subsidized" cost advantage of between $3,000 for a small car to $12,000 for a luxury SUV. Conversely, that cost advantage acts as a "tax" on U.S. cars sold in Japan, automakers say.

President Bush is scheduled to meet with Japanese Prime Minister Shinzo Abe in Vietnam on Saturday. Detroit's auto companies have faced hardships as Japan-based Toyota Motor Corp. enjoys soaring profits. A report in The Wall Street Journal on Monday said Toyota plans to capture 15 percent of the world car market by 2010 in its quest to unseat GM as the world's largest automaker.

Auto industry officials also note that China is keeping its currency artificially low against the dollar, making Chinese goods cheaper in the United States. And they allege that some U.S. trading partners, such as South Korea, have other unfair practices that hurt American automakers' ability to compete.

Energy Issues: The industry shares many of the same views as Bush on alternative energy. The Big Three are doubling their production of flexible-fuel vehicles, capable of running on blends of up to 85 percent ethanol, by 2010. The industry could seek tax breaks and other incentives from the Bush administration to encourage the building of alternative-energy vehicles.

But some environmental and consumer groups fault U.S. automakers for failing to take the lead in fuel efficiency. They credit Japanese automakers' success, in part, to their focus on vehicle fuel economy rather than size and engine power — the emphasis of the SUVs and trucks coming out of Detroit.

Compiled from NPR staff and Associated Press reports.

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