Shift to High Gear

When a superhighway linking Tokyo with the Mount Fuji resort area opened last month, Japanese officials predicted that it would cut travel time from four-hours to 90 minutes. Instead, bumper-to-bumper traffic clogged the new road so quickly that irate motorists began calling it "The Fuji Slowway."

The episode reflects the phenomenal rise of Japan's auto industry, which last year leaped ahead of shipbuilding, steel and electrical equipment to become the largest in the country. Last week the Japan Auto Manufacturers Association reported that Japan's twelve automakers produced 4,198,429 cars, trucks and buses during the fiscal year ending March 31, more than any other country except the United States. Passenger cars accounted for 52% of the total, raising Japan's world ranking in that field from sixth in 1967 to third, behind the U.S. and West Germany.

Protection at Home. Only one in five Japanese families now owns an auto but rising consumer affluence, the result of Japan's sustained economic prosperity, is changing that. This year Japanese car makers have confidently scheduled a 21% increase in their output, to 5,100,000 vehicles. Like most Japanese manufacturers, they enjoy a remarkable degree of government protection against foreign competition. Despite a 50% cut in tariffs this year as a result of the 1964 Kennedy Round of global tariff negotiations, imported autos still cost two or three times as much in Japan as in their country of origin. Ford's new semicompact Maverick, which sells for $1,995 in Detroit, carries a $4,167 price tag in Tokyo.

Low Japanese labor costs still account for a substantial part of the price differential between Japan-made cars and American or German products. Auto workers in Japan are paid an average wage of 6-c- an hour, compared with $2.42 in West Germany and $5.30 in the U.S. Moreover, industrial output per man-hour has been rising by 21% a year since 1960, while total labor costs have been climbing by only 11%. With such economic advantages, Japanese automakers have lately been able to snare a rapidly increasing share of the world auto market. Auto and truck exports rose 51% last year, to $714 million, and are expected to grow another 30% in 1969.

Trouble for Detroit. Nearly one-third of Japan's auto exports is sold in the U.S., where Toyota Motor Co.'s Corona and Nissan Motor Co.'s Datsun, both priced below $2,000, are now familiar sights. Last year, 110,000 Japanese cars--more than twice as many as in 1967--went to American buyers. Now two more manufacturers have entered the U.S. market. Fuji Heavy Industries is offering its low-priced $1,300 Subaru, and Honda, already known for its motorcycles, is pushing a $1,400 minicar. A third manufacturer, Toyo Kogyo, expects to make its American debut later this year with a car equipped with twin rotary engines.

American automakers are worried about Japanese inroads, not only in the U.S. market, but in such places as Australia, South Africa and South America. As a result, Detroit has been putting pressure on Washington to force open the Japanese market in two ways. U.S. automen want Japan to lower such nontariff barriers as commodity sales taxes and road-use taxes based on car size. More important, they insist that Tokyo should ease its severe restrictions against foreign investment in Japanese manufacturing firms. General Motors Chairman James Roche recently called Japan "the most notorious" of the world's industrial countries for this form of protectionism. Veiled threats of retaliation--perhaps including import restrictions on Japanese cars--have finally begun to melt Japanese resistance. Both Borg-Warner and Ford are anxious to begin producing automatic transmissions in Japan with 50% local participation, and the Japanese government is expected to approve the arrangements soon.

This file is automatically generated by a robot program, so reader's discretion is required.