Toyota shares trade at record high

Toyota shares rose to a record level on Wednesday after its chairman Fujio Cho met Ford's chief executive Alan Mulally amid speculation about possible co-operation between the two car makers.

Most observers believe a broad-ranging alliance between the two companies is unlikely, but there is recognition that more selective tie-ups would make sense for both.

Toyota shares rose 1.9 per cent to Y7,920 ($66.58) after earlier climbing to a record Y7.970. Ford shares were 1.2 per cent higher at midday in New York.

Toyota described the meeting as a courtesy call, and Ford noted that it met regularly with other automakers on "topics of mutual interest."

Mr Mulally is an admirer of the Japanese company's product development and manufacturing processes, some of which he sought to apply in his former job as head of Boeing.

After a robust year for global mergers and acquisitions, markets were quick to seize on the scantest possibility that Ford might be poised to forge a partnership with the world's most profitable big carmaker.

Producers, including Toyota, face broadly similar challenges of high costs, overcapacity, and growing regulatory constraints.

However, analysts expressed doubt that Toyota might seek a full-fledged alliance with financially troubled Ford.

"Toyota has a very crisp view of why it wants to partner with companies and that doesn't include turning around companies," said Ron Tadross, global automotive analyst with Banc of America Securities in New York.

In October General Motors broke off talks with Renault and Nissan on a possible three-way alliance.

Carlos Ghosn, Nissan's chief executive, has since said the company wanted to add production capacity in the US in the long term, but that an alliance was "not an urgent issue."

Rick Wagoner, GM's chairman and chief executive, says his company has no plans for a broad-ranging alliance with another carmaker.

However, GM does co-operate on individual projects, such as a venture with BMW and DaimlerChrysler to develop "dual-mode" hybrid technology.

Analysts said Ford and Toyota might also co-operate in developing alternative fuel technologies, building on their existing partnerships in a fast-evolving area where Toyota is recognised as an industry leader.

Despite its financial problems, Ford has one of the biggest research and development budgets of the world's carmakers. Besides hybrid vehicles, it has built a number of hydrogen-powered airport buses.

(F Times)