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FEDERAL TRADE COMMISSION

15 CFR Part 13

(File No. 921 0159)

General Motors Corp. and Toyota
Motor Corp.; Proposed Consent
Agreement With Analysis To Aid
Public Comment

AGENCY: Federal Trade Commission.
ACTION: Proposed Consent Agreement.
SUMMARY: The Federal Trade
Commission has provisionally accepted
a consent order with General Motors
Corporation and Toyota Motor

Corporation in settlement of a proposed complaint alleging violations of section 7 of the Clayton Act and section 5 of the Federal Trade Commission Act. Under the proposed agreement, the automakers would be limited to manufacturing and selling no more than 250.000 Sprinterderived vehicles per year, including light vans and trucks. The order would limit the Joint Venture to a twelve year period, ending no later than Dec. 31. 1997. While GM. Toyota and the Joint Venture would be permitted to exchange information necessary to produce the Sprinter-derived vehicles, the order would prohibit the transfer or communication of any information concerning current or future prices of new automobiles or component parts produced by either automaker, current or future sales or production forecasts or plans for any product not produced by the Joint Venture; and current or future marketing plans for any product. including products produced by the Joint Venture.

DATE: Comments must be received on or before February 27, 1984.

ADDRESS: Comments should be directed to: FTC/S. Office of the Secretary. Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT:

FTC/CD!. Edward F. Glynn. Washington, DC. 20580. (202) 634-6678 SUPPLEMENTARY INFORMATICH: Pursuant to Section 6(1) of the Federal Trade Commission Act, 38 Stat. 721. 15 U.S.C 45 and 12.74 of the Commission's Rules of Frontine (16 CIT 254), notice is hereby given that the following consent agreement containing a consent crder and an explanation thereof. having been illed with and accepted. subject to final ar proval, by the Commission, has been -paced on the public record for a period of sixty (60) days. Public comment is invited. Such comments or views will be considered by the Commission and will

e for my peron and copping sipel office in accordance with

$4.9(b)(14) of the Commission's Rules of Practice (16 CFR 4.9(b)(14)).

List of Subjects in 16 CFR Part 13
Automobiles, Trade practices.
In the Matter of General Motors
Corporation, a corporation, and Toyota
Motor Corporation. e corporation

The Federal Trade Commission having initiated an investigated of the proposed acquisition of shares in a Joint Venture corporation by General Motors Corporation and Toyota Motor Corporation and the respondents having been furnished with a copy of a draft complaint that the Bureau of Competition proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondents with violation of the Clayton Act and the Federal Trade Commission Act; and it now appearing that counsel for the Commission, General Motors Corporation and Toyota Motor Corporation are willing to enter into an agreement containing an order in settlement of that complaint:

It is hereby agreed by and between General Motors Corporation and Toyota Motor Corporation, by their duly authorized agents and attorneys, and counsel for the Commission, that:

1. General Motors is a Delaware corporation with headquarters at 3044 West Grand Boulevard, Detroit, Michigan.

2. Toyota is a Japanese corporation with headquarters at 1, Toyota Cho. Toyota City, Aichi Prefecture 471, Japan.

3. Respondents have been served with a copy of the proposed complaint to be issued by the Federal Trade Commission charging them with violations of section 7 of the Clayton Act, as amended (15 U.S.C. 18), and section 5 of the Federal Trade Commission Act, as amended (15 U.S.C. 45).

4. For the purposes of this order only. respondents admit all the jurisdictional facts set forth in the complaint attached hereto as Appendix A.

5. Respondents waive:

(a) Any further procedural steps: (b) The requirement that the Commission's decision contain a statement of findings of fact and conclusions of law;

(c) All rights to seek judicial review or otherwise to challenge or contest the validity of the order entered pursuant to this agreement; and

(d) Any claim under the Equal Access to Justice Act.

6. This agreement shall not become part of the public record of the proceeding unless and until it is accepted by the Commission. If this agreement is accepted by the

Commission. it. together with the complaint and exhibit 1 to the Complaint, attached hereto as Appendix A. will be placed on the public record for a period of sixty days. The Commission thereafter may either withdraw its acceptance of this agreement and so notify Respondents, in which event it will take such action as it may consider appropriate or issue and serve its decision in accordance with the terms of this agreement in disposition of the proceeding.

7. This agreement is for settlement purposes only and does not constitute an admission by Respondents that the law has been or would be violated as alleged in the complaint attached hereto as Appendix A.

8. This agreement contemplates that, if it is accepted by the Commission, and if such acceptance is not subsequently withdrawn by the Commission pursuant to provisions of § 3.25(f) of the Commission's Rules, the Commission may, without further notice to Respondents, issue its decision containing the following Order in disposition of the proceeding and make non-confidential information public with respect thereto. When so entered, the Order shall have the same force and effect and may be altered, modified or set aside in the same manner and within the same time provided by statute for other Orders. The Order shall become final upon service. Delivery by the U.S. Postal Service of the decision containing the Order to Respondent shall constitute service. Respondents waive any right they may have to any other manner of service. The complaint may be used in construing the terms of the Order, and no agreement, understanding. representation or interpretation, not contained in the Order or the agreement. may be used to vary or contradict the terms of the Order.

9. Respondents have read the complaint and Order contemplated hereby. They understand that once the Order has been issued. they will be required to file one or more compliance reports showing that they have fully complied with the Order. Respondents further understand that they may be liable for civil penalties in the amount provided by law for each violation of the Order, after it becomes final. Order

existing and doing business under the laws of Delaware, with its principal cifices at 3041 West Grand Boulevard, Detroit, Michigan, es well es its cfficers. employees, agents, its parents, divisions, subsidiaries, successors, assigns, and the officers, employees or agents of GM's parents, divisions, subsidiaries. successors and assigns.

2. "Toyota" means Toyota Motor Corporation, a corporation organized. existing and doing business under the laws of Japan, with its principal offices at 1, Toyota Cho, Toyota City, Aichi Prefecture 471. Japan, as well as its officers, employees, agents, its parents, divisions, subsidiaries, successors, assigns, and the officers, employees or agents of Toyota's parents, divisions, subsidiaries, successors and assigns. 3. The term "New Automobiles" means new passenger automobiles menufactured or sold in or shipped to the United States or Canada, and includes light trucks and vans.

4. The term "Module" means an integrated manufacturing facility. comprising, at a minimum, body, paint and final assembly functions, capable of producing not more than approximately 250,000 New Automobiles per year.

5. The term "Joint Venture" means any corporation, partnership or other entity jointly owned, controlled. managed or directed by GM and Toyota, or by both GM and Toyota and any other entity or entities, that engages in the manufacture or sale of New Automobiles. The term "Joint Venture" includes the successors and assigns of a Joint Venture, and any entity formed subsequent to a Joint Venture for purposes similar to the purposes of a Joint Venture.

6. Information is presumptively "public" if it is reported in a publication other than one authored by GM or Toyota.

operation beyond the earlier of twelve years after the start of production or December 31, 1997; provided, however. that nothing in this paragraph prohibits respondents from continuing any entity beyond twelve years for the limited purposes of winding up the affairs of the Joint Venture (which shall not include manufacturing New Automobiles). disposing of its assets, and providing for continuing warranty or product or service responsibilities for Joint Venture products.

IV

It is further ordered that respondents shall not exchange or discuss between themselves, or with any Joint Venture. non-public information in connection with New Automobiles relating to current or future:

1. Prices of GM or Toyota New Automobiles or component parts of New Automobiles, except pursuant to a supplier-customer relationship entered into in the ordinary course of business; 2. Costs of GM or Toyota products, except as provided in Paragraph V of this order,

3. Sales or production forecasts or plans for any product other than the product of the Joint Venture, or

V

4. Marketing plans for any product.

It is further ordered that respondents shall not, except as may be necessary to accomplish, and solely in connection with, the legitimate purposes or functioning of any Joint Venture, exchange or discuss between themselves, or with any Joint Venture, non-public information in connection with New Automobiles relating to current or future:

1. Model changes, design changes. or product designs relating to the product of the Joint Venture:

2. Sales or production forecasts or plans as they relate to the product of the Joint Venture; or

3. Costs of GM or Toyota products supplied to the Joint Venture.

VI

It is further ordered that each respondent shall, and respondents shall cause any Joint Venture to:

1. Maintain complete files and records of all correspondence and other communications, whether in the United States or elsewhere, between and among GM. Toyota and the Joint Venture concerning information described in Paragraph V:

2. Maintain logs of all meetings and nonwritten communications, whether in the United States or elsewhere. between and among GM. Toyota, and the Joint

Venture concerning information described in paragraph V, including in such logs the names and corporate positions of all participants, the dates and locations of the meetings or other communications and a summary or description of such information:

3. For a period of six years, retain and make available to the Federal Trade Commission on request the complete files, records and logs required by subparagraphs 1 and 2; and

4. Annually, on the anniversary date of this Order, furnish a copy of this Order to each management employee of the Joint Venture and each management employee of GM and Toyota with responsibilities for the Joint Venture, and furnish to the Federal Trade Commission a signed statement provided by each such employee affirming that he or she had read a copy of this Order, understand it, and intends to comply fully with its provisions.

VII

It is further ordered that each respondent shall, within sixty days from the date of issuance of this Order, and annually thereafter, submit in writing to the Commission a report setting forth in detail the manner and form in which it intends to comply, is complying and has complied with the terms of this Order. and such additional information relating thereto as may from time to time reasonably be required.

VIII

It is further ordered that each respondent shall notify the Commission at least thirty days prior to any change in itself or in any Joint Venture that affects compliance with the obligations arising out of this Order. such as dissolution, assignment or sale resulting in the emergence of a successor corporation, the creation or dissolution of subsidiaries, or any other change in the corporations or Joint Venture.

IX

It is further ordered that the prohibitions of this Order shall terminate five years after the termination of manufacturing or sales of New Automobiles by all Joint Ventures. Appendix A

Complaint

The Federal Trade Commission, having reason to believe that General Motors Corporation ("GM" or "General Motors") and Toyota Motor Corporation ("Toyota") intend to acquire shares in e Joint Venture corporation in violation of section 7 of the Clayton Act, as amended (15 U.S.C. 18), and section 5 of

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the Federal Trade Commission Act, as amended (15 U S.C. 45). and it appearing that a proceeding by the Commission in respect thereof would be in the public interest, the Commission hereby issues its Complients, pursuant to section 11 of the Clayton Act (15 U.S.C. 21) and section 5(b) of the Federal Trade Commission Act (15 U.S.C. 45(b)). stating its charges as follows:

1. Definition

1. For the purpose of this Complaint, the following definition shall apply: "new automobiles" means new passenger automobiles manufactured or sold in the United States or Canada, and includes light trucks and vans.

II. General Motors Corporation

2. General Motors is a Delaware corporation with headquarters at 3044 West Grand Boulevard, Detroit, Michigan.

III. Toyota Motor Corporation

3. Toyota is a Japanese corporation with headquarters at 1. Toyota Cho, Toyota City, Aichi Prefecture 471, Japan. IV. Jurisdiction

4. At all times relevant herein, each of the companies named in this complaint has been engaged in or affected commerce as "commerce" is defined in section 1 of the Clayton Act, as amended (15 U.S.C. 12), and section 4 of the Federal Trade Commission Act, as amended (15 U.S.C. 44).

V. The Proposed Joint Venture

5. Pursuant to an agreement reflected in a Memorandum of Understanding (hereinafter "Memorandum") executed by GM and Toyota on February 17, 1983, attached to this Complaint as Exhibit 1, GM and Toyota have agreed to form a Joint Venture corporation (hereinafter "Joint Venture"). GM and Toyota will each acquire one-half of the shares in the joint Venture and will each designate one-half of the Board of Directors of the Joint Venture. The Joint Venture will be managed principally by persons designated by Toyota. The joint Venture will manufacture new automobiles that will be designed by Toyota is consultation with GM and will be sold to CM, and may also manufacture new automobiles that would be sold to Toyota.

VI. Trade and Commerce

6. The relevant product market is the menufacture or sale of small new automobiles, which includes automobiles commonly referred to as subcompact, compact, and intermediate sized automobiles.

7. The relevent geographic market is the United States and Canada.

8. Concentration in the relevant product and geographic markets is high. 9. Both GM and Toyota are substantial competitors in the relevant product and geographic markets. VII. Effects of the Proposed Joint Venture

10. The effect of the Joint Venture may be substantially to lessen competition or tend to create a monopoly in the relevant markets in violation of section 7 of the Clayton Act, as amended (15 U.S.C. 18), or may be unfair methods of competition in violation of section 5 of the Federal Trade Commission Act, as amended (15 U.S.C. 45), in the following

ways:

(a) The output of the Joint Venture is likely to be significantly expanded beyond the single module, capable of producing not more than 250,000 new automobiles per year, an expansion that would not be reasonably necessary to accomplish any of the legitimate purposes of the Joint Venture; and

(b) The Joint Venture would provide no adequate safeguards against the use of the Joint Venture, or the relationships between GM and Toyota that are occasioned by the Joint Venture, for the transmission of competitively significant information beyond the minimum degree reasonably necessary to accomplish the legitimate purposes of the Joint Venture.

11. Each of the effects identified in paragraph 10, singly or in combination, would significantly increase the likelihood of noncompetitive cooperation between GM and Toyota, the effect of which may be substantially to lessen competition in the relevant markets, and would not be reasonably necessary to obtain any legitimate, procompetitive benefits of the Joint Venture.

VIII. Violations Charged

The parties' agreement to the proposed Joint Venture constitutes a violation of section 5 of the Federal Trade Commission Act, as amended (15 U.S.C. 45), and, if consummated, would constitute a violation of section 7 of the Clayton Act, as amended (15 U.S.C. 18). Wherefore, the premises considered, the Federal Trade Commission on this day of, issues its Complaint against said Respondents.

Exhibit 1-Toyota Motor CorporationGeneral Motors Corporation, Memorandum of Understanding February 17, 1983.

The Commission has deleted certain portions of this Agreement. Both GM

and Toyota have stated that disclosure of the deleted information, which the companies have maintained in strictest confidence, could likely cause serious competitive injury to the joint venture if publicly released. The Commission has determined that this information constitutes "commercial or financial information which was received from any person and which is privileged or confidential" within the meaning of section 6(f) of the FTC Act, 15 U.S.C. 46(f). Accordingly, the Commission is prohibited by that provision from making the information public.

Toyota Motor Corporation (Toyota) and General Motors Corporation (GM) agree to establish a joint venture (JV) for the limited purpose of manufacturing in the United States a specific automotive vehicle not heretofore produced, and related components described below. In so doing, it is the intent of both parties to provide such assistance to the JV as is considered appropriate to the enhancement of the JV's success. The JV will be limited in scope to this vehicle and this agreement is not intended to establish a cooperative relationship between the parties in any other business.

The purpose of this Memorandum is to summarize the current understanding of Toyota and GM regarding the basic parameters of this limited manufacturing arrangement.

Product

The vehicle to be manufactured by the JV will be derived from Toyota's new front-wheel drive Sprinter. Body styles will include a 4-Door Sedan and (6-12 months later) a 5-Door Liftback. Toyota will retain design authority over the vehicle, in consultation as to vehicle appearance with GM, the purchaser. As modifications will probably be made to the Sprinter or Corolla over time in accordance with market demand. Toyota will effect similar changes to the JV vehicle if such changes are deemed desirable by the parties. Vehicle certification will be handled by Toyota, with assistance provided by JV and GM as agreed upon by the parties.

Manufacturing

The JV will begin production of the GM-specific vehicle as early as possible in the 1985 Model year with nominal capacity of approximately 200.000 units per annum at GM's former assembly facility in Fremont. California.

As part of the technical assistance stated hereinafter. Toyota will take the initiative, in consultation with GM, in designing the Fremont manufacturing layout and coordinating the related

acquisition and installation of its machinery, equipment and tooling. In this regard, if GM deems it necessary for orders to be placed for construction of bulidings. JV machinery, equipment and tooling prior to the establishment of the JV to facilitate a timely introduction of the initial JV vehicle in the 1985 Model year. GM may do so in its own name directly or through Toyota, and the parties agree to share equally any capital expenditures or cancellation charges arising from such orders. The only exceptions to the above are as follows: In the event the JV is not established as a result of unfavorable U.S. governmental review of the matters set forth in this Memorandum or. following consultations between the senior management of Toyota and GM, as a result of either party notifying the other on or prior to one hundred twenty (120) days following the signing of this Memorandum of Understanding by the parties that such party is not satisfied with the prospects for developing an acceptable employe relations structure, GM shall bear 100% of the cost of such expenditures and charges.

GM's annual requirements are presently expected to exceed 200,000 units per annum. Both parties will, therefore, assist the JV in increasing its production to the maximum extent possible within the available capacity. Requirements for capacity beyond the first module will be the subject of a separate study.

The JV may later produce a variation of the JV vehicle for Toyota. Toyota and GM may also agree for GM to source the GM-specific vehicle from Toyota assembly plants in Japan. feeing JV capacity for Toyota's full or partial production of Toyota-specific vehicles. Purchase of Production Materials

The JV will purchase its production materials from those sources providing the least possible cost, consistent with its standards for product quality and vendor reliability of supply. Based on this principle. Toyota and GM have agreed upon a tentative sourcing approach, under which specific components to be purchased from Toyota, GM and other outside vendors. have been separately identified. Components to be manufactured by the JV, mainly major stampings. have also been identified.

Marketing

All GM-specific vehicles produced by the JV will be sold directly to GM or its designated marketing units for resale through GM's dealer network. If any variation of the JV vehicles should be produced by the JV for Toyota, such

vehicles would be sold directly to

Toyota or its designated marketing unit for resale through Toyota's dealer network. Neither Toyota nor GM will consult the other with respect to the marketing of JV products, or any other products, through their respective marketing organizations.

Vehicles sold by the JV should be priced by the IV to provide a reasonable profit for the JV. Toyota, and GM. To accomplish this, production costs must be kept as low as possible through the combined best efforts of the JV, Toyota, GM and other major suppliers. In this regard, the parties have been conducting extensive studies detailing how each can work to minimize JV expenses.

The initial IV selling price of the JV vehicle to be sold to GM during the 1985 Model Year will be determined at least 60 days prior to the start of production by negotiation between the JV and GM. This negotiation will be based on the production cost estimated 90 days prior to the expected start of production by the JV, with estimates of said cost to be guided by the feasibility study. In no event, however, will the said initial JV selling price be higher than the upper limit nor lower than the lower limit, each as defined below. The upper limit shall be determined by adjusting for feature differences the Dealer Net Price less of Toyota's then current U.S. model front-wheel drive Corolla equipped comparably with the JV vehicle concerned, and the lower limit shall be determined by adjusting for feature differences the Dealer Net Price less-% of said Corolla. The adjustment for feature differences will be made by agreement between the JV and GM.

Thereafter, although there may be exceptions, the JV vehicle selling price will be revised and determined for each model year. The new selling price for the new model year will be determined by applying to the selling price for the previous model year the Index as defined in Exhibit A. Since the calculations embodied in the Index may occasionally yield a selling price which is at significant variance with then current market conditions, the JV and GM will in such cases negotiate a more appropriate selling price.

If model changes or specification changes of the vehicle manufactured by the JV are necessary, Toyota, GM and the JV will agree upon these model changes or specification changes. Toyota will present to the JV the plan for the model changes or specification changes concerned. Then, the JV will submit to and negotiate with GM the planned model changes and specification changes together with the planned price changes. These model

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changes and specification changes will be made as agreed upon by the JV and GM.

The methodology to be employed in pricing optional equipment available on the JV vehicle (both initial and subsequent) will be comparable to that described in the three preceding paragraphs.

The initial prices of Toyota and GM components purchased by the JV will be determined 90 days or more prior to the start of production by negotiation between the JV and component suppliers after the determination of the specifications of the JV vehicle. Identification of the respective sources of supply and determination of the initial component prices will be guided by the feasibility study, with adjustments made for changes in specifications and appropriate economics.

Thereafter, the prices of components will be reviewed semi-annually. The new prices will be determined by negotiation between the JV and component suppliers.

If it is anticipated that continuation of the above-mentioned methods for determination of the prices of the JV vehicles to be sold by the JV and of components to be purchased by the JV would cause those prices to be at such levels as the JV would incur the losses which could endanger the normal operation of the JV. Toyota, GM and the JV shall negotiate and take necessary

measures.

As a fundamental principle. Toyota and GM shall each be free to price and free to market the respective vehicles. purchased from the JV without restrictions or influence from the other.

Operating Responsibility

The JV will be jointly controlled by an equal number of Toyota and GM directors, in line with Toyota and GM ownership. Toyota will designate the JV president as the chief executive officer and chief operating officer. Toyota and GM will assign to the JV other operating officers as the JV president and JV directors may request, but the parties recognize that the question of which party shall designate the JV officers in charge of financial affairs, labor relations and certain other operations has not yet been agreed upon. Quality Assurance

New vehicle warranty expense and administration will be the responsibility of the purchaser of the JV vehicle. The JV shall maintain product liability insurance for the benefit of the JV, the parties and other persons in such

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amounts as the parties may deem prudent, and the premium costs for such product liability insurance will be borne by the JV. In each product liability lawsuit involving a JV vehicle, the JV and each of the parties will communicate and cooperate with each other in all respects in investigating the facts surrounding the case and in litigating the matter. Each of the parties will refrain from taking adversarial positions against each other. To the extent possible under the JV's product liability insurance arrangements, the JV shall be the entity having the right to control such product liability lawsuits. However, the relative financial share of settlement or adverse judgment costs relating to such product liability claims or losses which are not covered by such product liability insurance shall be apportioned to Toyota and -% to GM. Matters relating to JV vehicle recall campaigns (including fines and costs of corrective actions) shall be the subject of further study and negotiation between the parties.

Technical Assistance

Toyota will grant to the JV the license to manufacture the vehicle developed by Toyota, and in exchange for this license, the JV will pay a reasonable royalty to Toyota as may be agreed upon by the parties. Toyota and GM will license the necessary industrial property rights to the JV, and in exchange for these rights. the JV will pay reasonable license fees to Toyota and/or GM as may be agreed upon by the parties. Toyota and GM will also provide technical assistance to the JV on a cost basis plus reasonable markup.

As part of the technical assistance, GM agrees to assist Toyota and the JV in completing compliance tests for safety, emissions and other areas, as agreed upon by the parties. Purchase/Sale of Equity Interest

Toyota and GM (including, subject to the approval of the other party, their wholly or majority-owned subsidiaries) will each hold a 50% equity interest in the JV. Neither party may transfer its equity interest in the JV to a third party without the written consent of the other. The above notwithstanding, the JV will terminate not later than 12 years after start of production. The methodology for disposition of Toyota and the GM equity interests prior to or upon JV termination will be incorporated in the JV documentation. Any surplus or deficit of the JV as at termination of the JV will be shared equally by Toyota and GM. in line with Toyota and GM ownership. Other issues relating to JV termination will be separately discussed.

Financing

Both Toyota and GM will contribute cash and/or fixed assets to the JV in exchange for equity interests. The amount to be continued as equity will depend upon the JV's total projected capital requirements. In the event that neither lenders or lessors insist that payments made by the JV be subject to appropriate guarantees, Toyota and GM agree either to provide such guarantees based on their pro rata share of the JV or to temporarily advance funds to the JV on their own account (also on a pro rata basis). To the extent permitted by creditors. Toyota and GM further agree that any security interests held by the parties in the JV assets will be shared equally.

Future Difficulties

If it is anticipated that the establishment or continuation of the JV would become difficult or infeasible due to any legal, political or labor-related reason which may arise in the United States, the parties will in good faith discuss the measures to be taken concerning the JV and endeavor to find appropriate solutions.

Agreements to Be Concluded

Depending upon the specific organizational form, various agreements will be concluded among Toyota and GM (including subsidiaries thereof) and the JV. These will include the following: Partnership Agreement or Shareholders Agreement and Articles of Incorporation; Vehicle Supply Agreement (JV to GM); Toyota Component Supply Agreement (Toyota to JV): GM Component Supply Agreement (GM to JV): Toyota Service Parts Agreement (Toyota to IV and/or GM): Technical Assistance and License Agreement; Realty and Other Asset Sale and/or Lease Agreements; Product Responsibility Agreement; and other documents related to the foregoing.

Since it is extremely important that the JV begin production as early as possible in the 1985 Model Year. Toyota and GM commit their best efforts to completing such documentation by May 15, 1983. In any event, both parties agree to immediately begin the detailed production process planning necessary for conversion of the Fremont plant. Except as set forth in the separate provisions for IV buildings, machinery, equipment and tooling referred to in the "Manufacturing" section above, expenses incurred by either party which directly benefit the JV will be properly recorded and, if mutually agreed, will be subsequently rebilled to the JV.

Transaction Review

The agreements reached between the parties relate only to the manufacturing JV described above and do not establish any special relationship between Toyota and GM who continue to be competitors in the United States and throughout the world. Toyota and GM further acknowledge that there are no implied obligations or restrictions other than those expressly set forth.

This Memorandum of Understanding is subject to review by the governments of Japan and the United States. Both parties commit to use their best efforts to obtain favorable reviews. Until execution of all formal documentation, satisfaction by the parties with the results of any government reviews which are undertaken, and satisfaction by the parties with the prospects for developing an acceptable employe relations structure, each party reserves the right to terminate negotiations without liability to the other and the JV shall not be established. However, except as separately set forth in the "Manufacturing" section, the parties shall share equally the expenses and costs incurred by the parties which would, but for such termination, be rebilled to the JV.

Governing Language

This Memorandum of Understanding shall be executed in both an English and a Japanese version, but the parties agree that in the event of a conflict between the meaning of the English text and the Japanese text, the English text shall control.

Dated: February 17, 1983. Toyota Motor Corporation. Eiji Toyoda.

Chairman of the Board.

General Motors Corporation.
Roger B. Smith.

Chairman of the Board.

Exhibit A-Market Basket Index

The best selling models among the sub-compacts will be the models which constitute the basket. The models shall be revised at every model year on the basis of model volume in the U.S., using the latest data for previous months.

For reference, the best selling models at present are as follows:

The "Index" shall be the weighted average rate of wholesale price fluctuations of these models from the prior model year to the current, weighting Corolla at % versus %% for all other comparable models combined without regard of model volumes in the

U.S.

For this purpose. the wholesale price shall be adjusted by eliminating the