When deadlocked trade talks eventually resume, automobile imports and automobile parts will dominate the discussion. Of Japan’s $59 billion trade surplus with the United States, nearly two thirds derives from trade in autos and auto parts. The recent negotiations stalled because the Clinton administration insisted that Japan agree to specific targets for increased imports in several key industries such as autos. Privately, in areas like telecommunications equipment, Tokyo is willing to deal. With autos, though, the public and private positions merge. Tokyo’s politicians insist that they will not budge. Japan’s automakers don’t believe that the Big Three are trying to secure a share of the Japanese market.
Are they right? Or are the U.S. carmakers finally for real when it comes to selling in Japan? Detroit knows that the “lack-of-effort argument” is a political killer in trade talks. In the past, U.S. firms like Motorola have turned to the government for help in trade disputes only after beating their heads against the Japanese wall. Detroit, in truth, has never made a comparable effort. But for the past six months the American auto industry has been telling anyone who will listen that it is getting its act together in the Japanese market. Andrew Card, head of the American Automobile Manufacturers Association, has said that new efforts by the Big Three should result in sales of 100,000 U.S.-made units in Japan three years from now, up from last year’s paltry 19,000.
That’s still not much in a market that consumes about 6.5 million cars a year. But you have to start somewhere. Ford Motor Co. CEO Alex Trotman, whose company owns 25 percent of Mazda, says that his company’s strategic position in Asia depends on its Japan operations: “A greater strength in Japan is an important fundamental of a. . .presence in the whole region.” Ford has built a distribution network and is now trying to leverage its relationship with Mazda – which makes most of the cars sold in Japan with a Ford badge – into a bigger presence. The Japanese drive on the right side of the car. So, finally, Ford is starting to sell a right-handdrive version of the Probe, the nifty compact made in the United States’ (A right-hand-drive Taurus will follow.) General Motors, too recently announced an agreement with Toyota in which Japan’s biggest automaker agreed to open its vast retail network to Chevy Cavaliers.
But privately, the Big Three say that when it comes to Japan, there are different levels of “seriousness.” Detroit is not about to plunge headfirst into a buzz saw; Japan’s economic woes have cut into demand for cars, and there are arguably already too many Japanese companies competing for the existing market. One week before the summit in Washington, Ford said it was going to sell its hot, new Mustang in Japan. How many Mustangs did Ford hope to sell? Three thousand. These days, Detroit has to hope that looking as if it’s serious is good enough.
