Osaka, June 8 (Reuters): The outspoken chairman of Toyota Motor Corp said on Wednesday he feared the possibility that US 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 US, but I don't think it’s that simple,” Hiroshi Okuda said.

“General Motors Corp and Ford Motor Company are symbols of US 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 automaker’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 US automakers ? 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 BigTwo, GM chief executive Rick Wagoner told shareholders on Tuesday of plans to cut at least 25,000 manufacturing jobs and close more US assembly and component plants over the next few years.

Both GM and Ford have been cutting back output as they lose sales to Asian brands led by Toyota, which now controls 13.4 per cent of the US car market, the world's biggest.

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

GM lost $1.1 billion in the first quarter and is riding out its worst financial crisis in more than a decade.