Toyota

One of the most celebrated joint ventures is NUMMI (New United Motor

Manufacturing, Inc.), a joint venture between General Motors and Toyota. It seems

surprising that the two largest competitors would even think of joining forces. GM is the

number one manufacturer in the United States as well as in the world. Toyota, on the

other hand, is number one in Japan and number two worldwide. NUMMI is a fifty-fifty

joint venture with the board of directors split equally between the two companies. Initially,

the venture was to manufacture the Toyota-designed subcompact, and the name chosen for

the car was Nova. The total number of vehicles assembled at NUMMI in 2002 was 369,856:

Toyota Tacoma (164,550), Toyota Corolla (137,642), Pontiac Vibe (59,556), Toyota Voltz

(8,108). What are the benefits each partner can expect to derive from the NUMMI joint

venture? Do you foresee any problems?

One benefit of this GM-Toyota is that it substantially reduces the amount of resources in

terms of money and personnel which each partner must contribute. The $300 million joint

venture saves GM a great deal of time and money in finding a new car to replace its aging

Chevette. Designing and tooling a new car can take three years or more and may cost $1.5

billion. The joint venture cut the time requirement in half and cost GM only one-tenth the cost

of what it would have