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Japan Motor Vehicles
The motor vehicle industry is the most successful
industry in
Japan. In 1991 Japan produced 9.7 million automobiles,
making it
the largest producer in the world (the United States in
that year
produced 5.4 million). Just under 46 percent of that
output was
exported. Automobiles, other motor vehicles, and
automotive parts
were the largest class of Japanese exports throughout the
1980s. In
1991 they accounted for 17.8 percent of all Japanese
exports, a
meteoric rise from only 1.9 percent in 1960.
Fear of protectionism in the United States led to major
direct
foreign investments there by Japanese automobile
manufacturers. By
the end of the 1980s, all the major Japanese producers had
automotive assembly lines operating in the United States:
Honda,
Toyota, Nissan, Mazda, and Isuzu (in a joint plant with
Subaru).
Following the major assembly firms, Japanese producers of
automobile parts also began investing in the United States
in the
late 1980s.
Automobiles were a major area of contention for the
JapanUnited States relationship during the 1980s. When the
price of oil
rose in 1979, demand for small automobiles increased,
which worked
to the advantage of Japan's exports in the United States
market. As
the Japanese share of the market increased, to 21.8
percent in
1981, pressures rose to restrict imports from Japan. The
result of
these pressures was a series of negotiations in early
1981, which
produced a "voluntary" export agreement limiting Japan's
shipments
to the United States to 1.68 million units (excluding
certain kinds
of specialty vehicles and trucks). This agreement remained
in
effect for the rest of the decade, with the limit reset at
2.3
million units in 1985. As Japanese assembly lines in the
United
States came on line, imports of Japanese automobiles in
1988
actually fell below the limit.
Similar restraints on Japanese exports were imposed by
Canada
and several West European countries. Japan's investment
increased
in Western Europe as well, but it faced pressure to
achieve high
local value added with the then-forthcoming establishment
of the
European Union in 1993.
Foreign penetration of the automotive market in Japan
has been
less successful. Imports of foreign automobiles were very
low
during the forty years prior to 1985, never exceeding
60,000 units
annually, or 1 percent of the domestic market. Trade and
investment
barriers restricted imported automobiles to an
insignificant share
of the market in the 1950s, and as barriers were finally
lowered,
strong control over the distribution networks made
penetration
difficult. The major United States automobile
manufacturers
acquired minority interests in some Japanese firms when
investment
restrictions were relaxed, Ford obtaining a 25 percent
interest in
Toyo Kogyo (Mazda), General Motors a 34 percent interest
in Isuzu,
and Chrysler a 15 percent interest in Mitsubishi Motors.
This
ownership did not provide a means for United States
automobiles to
penetrate the Japanese market until the end of the 1980s.
After the strong appreciation of the yen in 1985,
however,
Japanese demand for foreign automobiles increased. The
greater
sense of affluence in Japanese society was accompanied by
a rising
interest in European design. In 1988 automobile imports
totaled
150,629 units, of which 127,309 were European, mostly West
German.
Only 21,124 units were imported from the United States in
1988.
Data as of January 1994
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