US Auto Industry Welcomes Tough Car Talks With Japan
Ford makes plans for a fourfold jump in sales in Japan by 2000
DEARBORN, MICH. — BY the end of the century, Ford Motor Company hopes to increase its sales in Japan to 200,000 a year.
Half of those vehicles will be produced for Ford by its Japanese affiliate, Mazda Motors. The rest will be imported.
To achieve this more than fourfold increase, Ford first must expand its Japanese sales network, going from 300 to 700 showrooms across the island nation in order to reach more consumers.
''That means adding 100 dealers a year over the next few years,'' notes spokesman Al Chambers. ''It's May and yet so far this year, we've been able to add only one.''
With the United States set to impose billions of dollars in sanctions against the Japanese, American automakers are wondering: ''Why did it take so long?''
The US is running a record $66 billion trade deficit with Japan, nearly two-thirds of that in automobiles and automotive parts.
Last year, Japanese nameplates, like Toyota, Honda and Nissan, exported 1.64 million vehicles to the US. Add the products the Japanese built at American ''transplant'' assembly lines, and their share of the US new car market came to nearly 30 percent. In Japan, however, imports from the US and Europe accounted for barely 5 percent of the world's third-largest car market.
Japanese officials insist they have eliminated trade barriers long used to protect their home market. American automakers insist that's nonsense. While most formal barriers are gone, they argue that the government permits, with a wink and a nod, de facto rules that keep foreign cars and parts out of the country.
The Big Three have been asking for help in cracking the Japanese market for decades. They're finally getting some assistance.
On Wednesday, the Clinton administration announced plans to impose billions of dollars in sanctions on Japanese imports. The list of targeted goods is expected to include luxury automobiles, such as those sold by Toyota's Lexus division, and possibly sport-utility vehicles.
''There will be great damage to Japanese carmakers,'' warned Nobuaki Yanachi, a senior analyst at Kanaku Research Institute, but he said he still believes there is the possibility of compromise.
The administration also will file a complaint with the World Trade Organization. Japan plans to press its case with the WTO as well. Trade experts caution that it may be easier for Japan to challenge new sanctions than it will be for the US to prove Japan has closed its borders.
Although subtle, the barriers are effective, claim those familiar with the Japanese car market. Take automotive parts. Manufacturers like Toyota have extensive financial ties to the companies providing them parts, an incentive to maintain the status quo.
When Japanese carmakers first invaded American shores, they expanded rapidly by ''dualing,'' signing on with dealers already handling Big Three products. Until recently, dualing was not permitted in Japan. Even now, dealers are reluctant to take on imports for fear of offending the powerful Japanese brands they represent.
Other rules can result in a day's delay just to get a single imported automobile from the docks to the dealership.
US manufacturers deserve at least some of the blame, though. Until recently, most American imports had their steering wheels on the left. (The Japanese, like the British, have their wheels on the right.) That's quickly changing, however.
Chrysler has introduced several right-hand-drive vehicles, and will add four more later this year.
Chrysler has also slashed prices, reflecting the dollar's decline. A Cherokee sport-utility vehicle that cost 5.5 million yen in 1989 is now 3.3 million yen.
How far will the trade war escalate?
''I don't expect there will be a trade war,'' said US trade representative Mickey Kantor, suggesting Japan may return to the bargaining table.
World Trade Organization chief Renato Ruggiero urged both sides to work out a solution ''bilaterally and amicably.''
But Japanese trade officials have, at least for the moment, taken a hard line. They may simply be waiting to see if the Clinton administration has the will to follow through.
But one source suggests the administration has no choice this time. These talks, he stressed, affect more than just Japan.
A number of other Asian nations see the US as a target for expanded automotive exports. If Japan is allowed to maintain its closed market, he warns, these other nations will have no reason to end their own lopsided trade practices.