Why Asian auto giants want Big Three saved

New York, December 16: Asian automakers, especially Toyota Motor Corp., the world's second-largest automaker, have said that aid should be given to the Big Three. Apparently, these overseas automakers want their competitors, the Big Three, saved. They have got their reasons.

"We support measures to help the industry," said Toyota Motor (TM) spokeswoman Mira Sleilati. "We just want a strong, competitive healthy industry."

The Big Three (General Motors Corp, Ford Motor Co and Chrysler LLC) have lately been demanding a financial rescue package of $25 billion from financial rescue fund of $700 billion that aids both the credit markets and the financial ability of consumers for vehicle purchases.

United States House of Representatives Wednesday had approved the financial rescue package of $14 billion but Senate rejected the proposal subsequently. Analysts say that without quick help, two of the country's major car manufacturers i.e. General Motors Corp and Chrysler LLC could face bankruptcy. Ford is in slightly better position than its competitors.

Interestingly, the senators from southern states, where plants of Asian Auto companies (Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co.) are operated, had opposed the federal bailout plan and now they are saying that they are in support of measures to help the struggling auto industry.

Actually, the overseas automakers worry that if anyone of The Big Three went down, it will directly affect the production and it will also lead to widespread bankruptcy in the auto parts supplier industry. Secondly, Bankruptcy filing by General Motors Corporation and Chrysler LLC might cause chaos for United States economy.

"The U.S. economy would be in shambles," Erich Merkle, lead auto analyst with the consulting firm Crowe Horwath LLP, said,. "The robust U.S. economy that Toyota and the others depend on would suddenly not be as lucrative."

The U.S. is the largest market for Toyota, Honda and Nissan and these companies are expecting lower U.S. sales this year for the very first time.

"We want to get the economy back," said Michael Stanton, CEO of the Association of International Automobile Manufacturers, which represents most of the Asian automakers with plants in the U.S. "Everyone is hurting at this level of sales. Everybody is either cutting back or shutting down."

The final and the third concern for the overseas automakers is a longer-term problem. If a U.S. automaker fails, then any other automakers from China or elsewhere could buy the failed company’s assets and stand in competition.