A Car by Any Other

FOR YEARS AMERICAN AUTOMAKERShave complained bitterly that they were locked out of the Japanese market by a powerful dealer network that effectively excluded foreign firms. General Motors may have found a way to steer around the obstacle: Toyota and GM announced last week that beginning in 1996 the Japanese company would annually import 20,000 American-built GM cars (with right-hand drives) and sell them in Japan under the Toyota brand name. Since GM shipped only 9,000 cars and trucks to Japan last year, the venture will immediately boost its profile in the tough Japanese market.

But does the venture make economic sense for Toyota? At a time of falling domestic sales, plummeting profits and declining market share in the U.S., it would not seem a golden moment for a Japanese manufacturer to invite cheap imports onto its home turf. With sticker prices of $10,000, GM's Chevrolet Cavaliers would be the second cheapest foreign cars in the market, after the $7,900 Ford Fiestas produced by Kia Motors in South Korea.

For Toyota, the deal may be more an adroit political gesture than a sensible business proposition -- a modest step toward reducing the nearly $50 billion American trade deficit with Japan. Discussions between the two firms began during the ill-fated visit George Bush and U.S. business leaders made to Japan in January 1992. Japanese manufacturers vowed to sell more American-made vehicles in Japan. Now Toyota is making good on its pledge. "It's a political and not an economic effort on Toyota's part," says Stephen C. Usher, an analyst at the Kleinwort Benson International investment bank in Tokyo.

The 20,000 GM cars represent a tiny share of the overall market, of course. Japanese carmakers sell nearly 7 million vehicles a year, and foreign manufacturers an additional 185,000. But these are dire times for the Japanese industry. If Japanese executives needed a reminder of their troubles, last week the stock market closed below the psychologically important 18,000-point mark for the first time in eight months. Automaker stocks were among the losers.