Tokyo — The efficient Japanese auto industry has finally overtaken the United States as the world's No. 1 car producer, but its primacy has been achieved at some cost.
In fact, the leadng Japanese manufacturers, at the apparent height of their power, are gnawed by serious worries about the future.
The most often heard phrase among carmakers here is "survival strategy" as they hunker down to cope with what is expected to be a decade of cutthroat competition worldwide.
The industry's heart-searching has been going on for months as it absorbed shock after shock.
It all began with settlement of the longstanding auto trade row with the US, with the Americans finally winning a governmental agreement to curb Japanese car exports for the next three years.
Within the local industry there were howls of protest at what was seen as a terrible blunder in setting a precedent for governmental interference in business issues.
This would seem to have been vindicated, as "me too" demands quickly followed and were accepted from Canada and the European Community.
Thus, Japan's hands have been effectively tied in its three most important overseas markets. To cope, the Japanese are raising prices -- negating one of their most effective selling points.
Naturally, the makers have been trying to diversify markets in recent years, and this effort is being intensified.
The Middle East was a fast-growing customer, but shipments are off substantially this year because of the Gulf war and other political uncertainties in the region.
But in the first half of this year, there has been a 70 percent surge in exports to Africa, a 33 percent increase to other parts of Asia -- with China a significant new customer -- a 47 percent boost to Latin America, and a 39 percent rise in shipments to Australia and New Zealand.
Yet all these regions combined still only make up about half the number of cars Japan shipped to the United States last year.
According to one industry analyst: "There is really no way to make up for the curbs on American and European shipments. They are going to hurt."
The Japanese now produce more than 10 million vehicles a year.
Incredibly, they insist that exports must exceed 6 million units to protect the livelihood of the more than 1,000 partsmakers who supply the 11 vehicle manufacturers. That target looks hard to achieve this year.
There doesn't seem much hope of domestic sales taking up the slack. These were off 8 percent in July compared with a year ago, shattering all expectations.
July is usually a good sales month because workers receive their midsummer bonuses.
But analysts say consumers are tightening their purse strings. The domestic market has reached the saturation point, and owners are hanging on to their cars at least 18 months longer than they did in the 1970s before considering a trade-in. Heavy increases in gasoline prices over the past two years haven't helped either.
Major shock waves have rippled through the industry since the announcement that General Motors and Japan's Isuzu Motors are to expand their longstanding business relationship to include Suzuki Motors, a major manufacturer of minicars and motorcycles, for joint production of fuel-efficient cars of 1100 cc and under.
GM is the one everyone here fears, because it can outspend all 11 Japanese firms year in, year out, on new model research and development and still have cash to spare.
Takashi Ishihara, president of Nissan, Japan's No. 2 manufacturer, thinks the three-company partnership will be the precursor of others here and elsewhere to survive the expected global "small car war" in the years ahead.
The tie-up also gives GM a much stronger foothold in the domestic market to turn the tables on the until-now rampant Japanese. And it will form a base for major sales expansion in the still largely untapped Asia-Pacific market for its "world car."
Nissan's Ishihara predicts that some Japannese manufacturers might not long survive the competition -- perhaps a good thing, they feel, because 11 companies are too many for one country to support.
Nissan has already begun contacts with Fuji Heavy Industries, one of the smaller companies, for production of a minicar to match the GM-Isuzu-Suzuki model. For Fuji this could be a lifesaver, because it suffered more than any others from the US export curbs.
Some observers, however, are worried about the mood of the industry. As one news- paper put it: "We fervently hope [the manufacturers] will not lose their vitality because of setbacks like the export restrictions."
One sign is that Toyota last month cut back its production 8 percent, after uninterrupted expansion for more years than anyone can remember. Other companies insist they won't follow suit, but industry analysts think this is inevitable.
This situation may give Detroit a lift, if nothing else. Maybe the tide can be turned, after all.