Gulf Crisis Worries Japan's Automakers

THE crisis in the Middle East may provide a fertile opportunity for United States automakers to win a long-sought crackdown on their Japanese rivals. For years, the Big Three have demanded tough new quotas to supplant the decade-old voluntary restraint agreement (VRA) limiting Japanese passenger car imports to 2.3 million units annually. Until now, that call won little sympathy in Washington, D.C.

But the Big Three are counting on growing resentment about the minor role the Japanese have been willing to play in the Gulf crisis to change public sentiment - and the mood in Washington.

Last Friday, Chrysler chairman Lee Iacocca pointed to ``the sacrifices'' American soldiers may soon have to make in the Gulf crisis, ``an area of the world that supplies most of Japan's oil.''

The same sentiments were echoed in a letter sent by Rep. Richard Gephardt (D) of Missouri and four other influential congressman to Japanese Prime Minister Toshiki Kaifu. In it, they expressed ``disappointment'' over Japan's role in the Middle East crisis and called for ``meaningful'' new auto restraints.

Just what is ``meaningful'' is a matter of definition. Japan argued the original VRA posed a significant hardship, but in recent years, the impact has been negligible, if that. In fact, last year, the Japanese fell short of the quotas, importing just 2 million passenger cars, even though Japan's share of the American market rose two points, to 32 percent. That's because of growing production at the so-called ``transplants,'' US-based assembly plants, which is not counted in the quotas.

These factories are producing more than 1.5 million cars and light trucks a year. By 1995, that total will be around 3 million units, providing Honda, Nissan, and Toyota with at least half the cars they sell in the US.

Ford Motor Company chairman Harold Poling has been demanding that transplant production be counted into the quotas. The United Autoworkers Union would like to go a step further, not only lumping all Japanese vehicles together but adding a strict market share cap, certainly less than last year's 32 percent.

Tough trade sanctions have so far failed to muster enough support in Congress. That could change, suggests David Cole, director of the Office for the Study of Automotive Transportation at the University of Michigan: ``There are a lot of [federal lawmakers] already disenchanted with trade issues, and now the question of the Japanese position in the Middle East ... is probably going to do something in Washington.''

Just how bad things get for the Japanese could depend on how long any Gulf war lasts.

``It is a very emotional issue when parents have children who may be killed,'' concedes Muneo Kishimoto, chairman of Mazda (North America) Inc. Mr. Kishimoto is hopeful the furor over Japan's Gulf role ``won't be long-term,'' and insists ``both sides need to be reasonable'' in order to head off a trade war.

Other Japanese industry executives are less confident, however. A ranking Toyota executive, who asked not to be identified, said he has been frantically trying to get the message across to his own Japanese associates. In turn, he says, it is vital that Japanese business leaders convince the government of Prime Minister Kaifu to act - or face trouble. ``I'm very worried,'' he says.

Even if Washington does not take action, industry insiders suggest the Japanese could still pay a price for their Gulf position.

``Right now, if I were to buy a new car, I wouldn't consider a Japanese car,'' says Tom Hobson, a Bellevue, Wash., engineer who has owned five Toyotas since 1980. ``I think this thing in the Persian Gulf isn't just a problem for the US. The Japanese need the oil, ... but they just aren't pulling their weight.''

Japanese auto executives wonder how many other American motorists will begin feeling the same way if there is a war.

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