Toyota, the Japanese carmaker, is extending the hand of friendship to General Motors (GM), which has recorded massive losses partly because of its Japanese counterpart’s aggressive business tactics.

Toyota, fresh from reporting its biggest profit at more than 1 trillion yen (£5 billion), hosted top-level talks over the weekend that opened the way for technology sharing with its US rival, particularly on fuel cells and other advanced engine projects. Fujio Cho, president of Toyota, said that he wanted to “deepen co-operative relations with GM”.

Toyota’s sudden shift of approach, after a year in which its US sales surged at the expense of GM and Ford, comes amid mounting political pressure on Japanese carmakers to cool a potential trade spat. A senior Japanese Trade Minister last week said that it was vital that the country’s top car manufacturers helped their ailing US counterparts.

Top executives at other Japanese carmakers rejected the call. But Toyota believed that there was a risk that the US would return to the notorious “Japan-bashing” mentality of the 1980s, unless it helped to ease the woes of US carmakers.

Given the importance of Japan’s car industry to its overall economy, Tokyo’s political insiders said that it was essential that Japan appeared to be accommodating to US carmakers. By doing so, both Toyota and the Ministry of Trade hoped to eliminate the possibility of a sudden US tariff rise of the sort that the Bush Administration imposed on steel imports during the restructure of the US steel industry.

At the weekend meeting at the World Expo, near Toyota, Rick Wagoner, chairman and chief executive of GM, was understood to have laid out his company’s dire financial situation. The US carmaker has suffered its worst quarterly losses for 13 years and is faced with a looming pensions and healthcare crisis. Standard and Poor’s rating agency recently downgraded GM’s debt to junk status.

The meeting then reportedly turned to talk of co-operation over hybrid cars — vehicles powered by a combination of petrol and electricity. This is an area in which Toyota has stolen a considerable march over its US rivals. Analysts said that Toyota and GM were planning to establish a joint venture that would allow cost sharing in the expensive business of fuel cell development.

The concept of giving US carmakers breathing room was recently raised by Hiroshi Okuda, chairman of Toyota. Speaking in his role as head of Keidanren, the Japan Business Federation, he suggested that steps should be taken to give US carmakers time to recover.

His call infuriated senior figures at Nissan and Honda. As well as direct co-operation with GM, the measures that he had in mind might include short-term price rises of Japanese vehicles in the US to allow GM and other American carmakers to attract customers.

Several analysts said that it was a measure of the success of Japanese carmakers that their vehicles were not sold in the US with any major incentives to consumers — removing the scope for carmakers to reduce these as a conciliatory tactic.

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