To curb or not to curb the import of Japanese cars -- that's the big question facing West Germany today. In othr words, will the West German government, a longtime backer of free trade, slam the door on the Japanese? Or will it stand by its open-market position and try to meet the Japanese threat in the factory and showroom?
Clearly, the Japanese have seriously upended the West European auto industry over the past 18 months by grabbing one in every 10 new-car sales in West Germany, double the number of a year ago, and made serious inroads in a half-dozen other countries at a time when the overall European automobile market itself is down.
According to reports from Tokyo, the Japanese Ministry of International Trade and Industry says Japanese carmakers will voluntarily slow down shipments to West Germany for the rest of the year, thus keeping their share of the market to no more than 10 percent. Moreover, Japanese special trade representative Saburo Okita will visit Brussels Oct. 27 in an effort to mend what is viewed as his country's badly damaged fences with the European Community (EC).
Only Britain and France now have tacit agreements to restric the Japanese -- Britain at 11 percent of total car sales a year, although the total so far in 1980 is running well ahead of that figure, and France at 3 percent. Italy limits Japanese imports to 2,200 units a year.
Gerhard Prinz, chairman of Daimler-Benz AG, remains firm that West German engineering is up to the task.
"We see absolutely no reason not to be able to meet the Japanese competition, " he asserts, but adds, "We have to improve our costs per hour performed in the factory."
That may be much easier said than done. It costs the Japanese much less money than its international competitors to produce the cars they sell in Europe as well as in the United States.As a result, the prices reflect the lower factory costs.
Per-hour costs in Japan are about $9, compared with $15 or higher in West Germany. Japanese car workers are on the job 2,000 hours a year, in contrast to about 1,600 in Germany. Too, the Japanese workers have less vacation and sick time.And absenteeism, which runs from 10 to 15 percent in West Germany, is almost unknown in Japan.
As a result, Japanese cars are sold in West Germany at prices that are 10 to 20 percent below those for comparable domestic models, despite the $450 shipping cost and 11 percent Ec import tariff.
"Germany is perhaps the toughest automobile market anywhere," Seisi Kato, chairman of Toyota Motor Sales in Tokyo, said in 1978, "and there is no exaggeration in saying that success in West Germany equals success around the world.
The Japanese were prescient as they reached for the sky.
Mr. Prinz reports: "West Germany exports about 25 percent of its total national output, compared to 10 percent for Japan." Because of this fact, he continues: "I feel that Germany cannot afford to turn to protectionism because the repercussions of such a protectionist attitude could very negatively affect our own exports."
The same is true for France. Renault, for example, exports 80 percent of its output. Despite the 3 percent tacit agreement on Japanese imports, Bernard Hanon, head of the Renault car division declares: "We are for free trade, but it should be under the same rules of the game for everybody. We feel it is not right now.
"The Japanese yen, we feel, it undervalued by 20 to 25 percent. When you deal with such tight margins, this give s a tremendous competitive advantage to the Japanese."
The heavy of Japanese imports into Europe has severely hurt Renault's exports , according to Mr. Hanon.
A recent study by a West German marketing analyst forecast that by 1984 the Japanese will capture up to 14 percent of the total European auto market -- a sobering thought to the car-building countries of Western Europe.
Any attempt to stop the Japanese may come hard. To deflect any such move, Nissan Motors, builder of the Datsun, has just signed a deal with Alfa Romeo, Italy's hard-pressed, state-owned automaker, to build 60,000 cars a year in Italy, starting in 1983 -- a tie-up that, until now, was flatly opposed by Fiat, one of the largest automotive combines in the world.
Also, Honda and BL Ltd., Britain's bedeviled government-owned car company, will jointly produce a car in Britain -- to be called the Bounty -- within the next two years.
Meanwhile, despite the Japanese success, new auto sales in most of Western Europe are running substantially below those of a year ago.
In West Germany, sales are off more than 10 percent for the first eight months of 1980. France is down 5.7 percent; Britain, 11.9 percent; Belgium, 3.6 percent; the Netherlands, 20.1 percent; and Denmark, a whopping 42.4 percent.
Among Europe's major carmakers, Ford of Europe was off 13.5 percent; General Motors of Europe, 12.8 percent; PSA Peugeot-Citroen, 17.6 percent; Volkswagen, 7 .7 percent; adn BL Ltd., 24.8 percent.
In contrast, the Japanese wee up a stunning 25.7 percent.
European carmakers recognize the problem, but any hope of reaching an accord among them as to what can be done is slight. Further, the Japanese show little intention of limiting their long-range plan to solidify their grasp on the European car market.
In Tokyo, Mr. Kato declares: "Protectionism can only hurt the growth of the world economy, and I, for one, believe that it is absolutely necessary to do the opposite -- eliminate the barriers to trade."
The Japanese deny that they are responsible for the automotive troubles in the US and Europe.
The future may depend on the outcome of hearings now under way before the International Trade Commission in Washington.
If the commission should rule late next month that the unending flood of Japanese cars has caused "substantial injury" to the US companies, then the US may find an excuse to slap restrictions on the Japanese. If this happens, the Japanese, forced to cut back in the US, would turn to riper pastures for their cars in other parts of the world.
Western Europe, already being softened up, is a logical place to turn.