7. “The Right Product at Right Time”

Tokyo – Less than a generation ago, the Japanese automobile was little known, and less respected, around the world. Even Japanese consumers were convinced that, could they afford it, the longer, plusher, gas-guzzling models of the United States, or the more bizarrely sporty autos of Europe, were preferable to their own modest products.

But times have changed. Last year, Japanese industry exported 5,966,961 vehicles (including trucks), or fully 54 per cent of its entire production. Most of those were directed to markets in the United States and Europe where, for a variety of reasons, Japanese cars have become the rage.

Japanese manufacturers claim they were as surprised as anyone by the surging demand for their product. “We just happened to have the right product at the right time,” says one automobile executive.

As they tell it, the rising popularity of Japanese automobiles in the American market was due much more to the sudden increase in the price of oil than to any “blitz” or economic offensive on their part. When prices at the local pump doubled in less than a year, and American auto manufacturers were unable to supply a sufficient number of fuel-efficient cars, Japanese auto dealers moved in to fill the gap. In Detroit it is widely presumed that the ills of the American auto industry are largely caused by the Japanese “assault”. Had the Japanese restrained themselves, and not taken advantage of the situation, the 30 per cent unemployment figure for U.S. auto workers would not have arisen, claim the U.S. auto makers.

The Japanese are convinced that their success in the United States is not the primary factor behind the financial and marketing failure of the U.S. companies. They argue that it was American auto mismanagement rather than Japanese “offensives” that resulted in the deficits.

But fuel efficiency must be only part of the problem, especially if the success of Japanese makers in the European countries is considered. There, the high quality of Japanese goods, their comparatively low price, and the excellent after-sales network are sales points, as in Europe the Japanese are competing against local producers well-stocked in fuel-efficient cars.

Despite their success, Japanese auto makers and observers of the auto scene are increasingly uneasy about the future. On the one hand, they face the prospect of a tide of protection in the United States as well as in Europe.

On the other hand, the Japanese auto makers are caught on the horns of a domestic dilemma. With the Japanese auto market also stagnating – sales and registration at home are slack, and many dealerships are in deficit – they are under increasing pressure to export.

One highly touted, long-range solution to Japan's embarrassment of auto riches is the internationalization of Japan's auto industry. Already, there are clear signs that Japanese auto makers are moving to produce a large number of their vehicles overseas, no matter what the consequences for Japanese employment.

Given the fate of other auto makers, the Japanese should consider themselves quite fortunate. With most of the world's big car producers in deficit, the worst the big Japanese makers have to report is a slight decline in profits.