msnbc.com staff and news service reports
updated 6/8/2005 1:39:54 PM ET 2005-06-08T17:39:54

In the interest of preserving relations between Japan and the United States, the chairman of Toyota Motor Corp. Wednesday suggested his company might raise vehicle prices in America to support U.S. automakers.

Hiroshi Okuda said Wednesday he feared the possibility that U.S. policy could turn against Japanese auto makers if local giants such as GM and Ford were to collapse.

“Many people say the car industry wouldn’t revisit the kind of trade friction we saw in the past because Japanese auto makers are increasing local production in the United States, but I don’t think it’s that simple,” Okuda told a news conference.

“General Motors Corp. and Ford Motor Co. are symbols of U.S. industry, and if they were to crumble it could fan nationalistic sentiment. I always have a fear that that in turn could manifest itself in policy decisions,” he said, speaking as the head of the nation’s biggest business lobby, the Japan Business Federation.

Okuda, who as chairman is removed from the auto maker’s day-to-day operations, raised eyebrows and invited criticism on both sides of the Pacific when he said two months ago that Toyota should think about ways in which it could aid U.S. auto makers — such as by raising product prices — as they reel under massive health-care costs and sliding sales.

In the latest sign of tough times at Detroit’s Big Two, GM Chief Executive Rick Wagoner told shareholders on Tuesday of plans to cut at least 25,000 manufacturing jobs and close more U.S. assembly and component plants over the next few years.

Okuda reiterated his view following General Motors Corp.’s announcement Tuesday that it will cut 25,000 jobs to reduce costs.

Asked what he thought of GM’s latest restructuring plan, Okuda said: “If you think about GM’s current output volume and vehicle lineup, laying off 25,000 to 30,000 employees is inevitable.”

GM, the world’s biggest auto maker followed by Toyota, lost $1.1 billion in the first quarter and is riding out its worst financial crisis in more than a decade. It has been closing and idling plants over the past four years and will have cut its annual North American assembly capacity to 5 million vehicles by the end of this year from 6 million in 2002.

Meanwhile, top Japanese auto makers are adding jobs and assembly lines in North America to meet growing demand there, prompting executives, including Toyota President Fujio Cho, to dismiss concerns that their success would reignite a political backlash.

Honda Motor Co. has ruled out price hikes to help ailing U.S. auto makers, saying such increases could be considered price manipulation under U.S. anti-trust law.

Okuda, however, said auto makers can raise prices when they introduce new versions.

The Associated Press and Reuters contributed to this report.

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