Green Light

The GM-Toyota deal rolls on

It was anything but a modest proposal. General Motors, the world's largest automaker, would hook up with Toyota, the No. 3, to build some 200,000 small cars a year in a now closed Chevrolet plant outside San Francisco. When it was announced last February, the plan provoked cries of alarm from rival car manufacturers and set off an intensive Federal Trade Commission review. Last week, after GM and Toyota signed an agreement stating that they would abide by U.S. antitrust laws, the FTC gave the green light to the venture.

The agency's 3-2 vote, which will become final after a 60-day period for public comment, opens the way for the partners to begin producing the cars late next fall. Experts look for the new auto, already dubbed the Toyolet by Detroit wags, to resemble Toyota's redesigned 1984 Corolla, which sells for some $7,000.

The new venture will strengthen GM's position in the small-car field, where it has been glaringly weak. Although U.S. automakers have been trying since the late 1970s to assemble a model that can compete profitably with economy-size imports, they have been largely unsuccessful. The Japanese currently build small cars for an average of some $2,000 less than corresponding U.S. autos.

The prospect of GM's gaining access to Toyota's small-car know-how sent fear into the boardrooms of Ford, Chrysler and American Motors. GM already accounts for 60% of all U.S. sales of American-made cars, while Toyota has 25% of the market for imports. "I don't care what kind of fig-leaf consent order they try to cover it up with," said Chrysler Chairman Lee lacocca after last week's FTC decision. "It's not right, and I will do everything in my power to see that the American public gets a clear picture of just how wrong it is."

The FTC action, which permits the partners to build up to 250,000 autos a year, was also strongly opposed by Commissioners Michael Pertschuk and Patricia Bailey. Pertschuk called the venture "a classic antitrust violation."

The GM-Toyota deal is expected to force other U.S. carmakers to race to make similar arrangements with Japanese firms. Some industry watchers are even predicting that it will not be long before virtually all small cars sold in the U.S. will be either built abroad or made from imported components.