updated 7/11/2005 8:39:14 AM ET 2005-07-11T12:39:14

Toyota's president said Monday a tie-up with U.S. rival General Motors on fuel-cell vehicles is in its final stages — but promised to do his best to beat GM and Ford.

"They are good competition," Katsuaki Watanabe said of General Motors Corp. and Ford Motor Co. in a group interview with foreign media. "We don't want to lose."

Watanabe, 63, whose appointment was approved at a shareholders meeting last month, is taking the helm at Toyota as the Japanese automaker is on a pace to potentially surpass GM, the world's largest carmaker, in global sales.

Toyota Motor Corp. aims to capture 15 percent of the world's market in the years following 2010. Depending on how the rivals fare, that could put Toyota ahead of GM.

Watanabe said it's just a matter of time before details can be hammered out for a deal with Detroit-based GM on fuel cells, a clean technology that is still largely experimental.

Fuel-cell vehicles emit virtually no pollution because they run on the energy produced when hydrogen stored in the fuel tank combines with oxygen in the air to make water.

GM and Toyota have a longtime partnership that does not involve stakes in each other. They run a plant together in California and have a 1999 pact to share technology. A deal on fuel cell vehicles would be an important expansion of that agreement.

"We are in the final stages of the talks," Watanabe said at the company's Tokyo office. "It's better not to let the talks drag on."

Toyota's continued growth at a time when both GM and Ford are stumbling has set off some concerns here about a possible backlash reminiscent of the trade tensions that emerged about two decades ago.

Watanabe brushed off the idea that Toyota may become the world's top-selling automaker during his tenure, laughing that he hasn't thought about it and he isn't even really expecting it.

His main mission is to keep stable growth going without compromising on day-to-day efforts, including improving quality control, training workers around the world and cutting costs, he said.

He denied that fears of a backlash were behind Toyota's recent decision to raise prices on several models in the United States, including the hot-selling Camry compact. Watanabe has a reputation for being both a cost-cutter and price-cutter, so the higher U.S. prices appear to run counter to his overall strategy.

Toyota looked at various factors such as costs, market conditions and profitability to make the decision, and the recent heavy discounting by U.S. automakers was also studied, he said. Toyota decided such discounts weren't appropriate for their own cars, he said.

"We looked at the total picture and made the decision. And we think we can put up the numbers" in sales, he said.

Watanabe, who is a karaoke and baseball fan, said Toyota sees increasing hybrid production as key to expanding global sales.

Toyota is considering making a hybrid pickup truck, and the ideal would be an entire lineup of models in hybrids, he said.

Hybrids aren't as clean as fuel cell vehicles, but they deliver better mileage than comparable gas-engine vehicles by switching between an electric motor and gasoline engine. Although other automakers are selling or developing hybrids of their own, Toyota leads in the sector with its Prius as well as other models it has introduced as hybrids.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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