New GM will have no stake in NUMMI plant

The failure to reach a consensus ended a 25-year-old pact between Detroit based General Motors Corp.(Pink Sheets: GMGMQ) and Tokyo based Toyota Motor Corp.(NYSE:TM,TYO: 7203) with the former pulling out of the auto-assembly venture. Thus the New GM will have no stake in NUMMI.

GM North America President Troy Clarke said in a statement, “As part of its long-term viability plan, General Motors has decided that its ownership stake in the New United Motor Manufacturing Incorporated (NUMMI) joint venture with Toyota will not be a part of the 'New GM’.”

“After extensive analysis, GM and Toyota could not reach an agreement on a future product plan that made sense for all parties,” Clarke added. "We have enjoyed a very positive and beneficial partnership with Toyota for the past 25 years, and we remain open to future opportunities of mutual interest," he said.

Toyota wanted the venture to continue
Toyota’s foray into the U.S. market and subsequent growth there was propelled primarily by the low-cost import models.

The resultant criticism from all quarters led to the establishment of the NUMMI plant in 1984.

Jointly owned and operated by GM and Toyota, the plant was the latter’s first U.S. auto-assembly factory. Although GM had a fifty percent stake in the plant, Toyota models accounted for three quarters of the output, according to trade publication Automotive News.

Hideaki Homma, Toyota’s spokesman, said, “Toyota’s hope was to continue the venture and we haven’t yet decided any plans at the factory. While we respect this decision by GM, the economic and business environment surrounding Toyota is also extremely severe, and so this decision by GM makes the situation even more difficult for Toyota.”

Production of Prius likely at NUMMI
GM relinquishing its stake in NUMMI essentially means that it will stop manufacturing the Pontiac Vibe vehicle line in August at the plant. The year 2008 saw the production of 70,000 Vibes at NUMMI.

Corolla small cars and Tacoma trucks are also manufactured at the plant. Now it is likely that Toyota will produce larger numbers of the Toyota Corolla, and possibly the third generation Prius, the company's blockbuster hybrid model at the plant.

In all, the factory, which employs 5,400 people, has a capacity to churn out 420,000 cars and trucks per annum.