GM's 'Japanese strategy' riles other US automakers
When Japanese Trade Minister Sosuke Uno lands in Washington on Wednesday, he will step into a battle over how wide a variety of Japanese cars will be available to US consumers starting in the 1985-model year.
It is a fracas that sharply divides the US auto industry. At stake are not only the kinds of cars that will be found in US dealerships, but to some extent the number of domestic auto-industry jobs.
At issue are whether:
* A GM-Toyota joint venture violates antitrust laws.
* Import quotas will continue as are or be raised.
* Domestic-content legislation (requiring a percentage of parts in imported Japanese autos to be made in the US) will get through Congress.
United States and Japanese policymakers are expected to reach several key decisions in the next few weeks that will affect the selection of Japanese cars available to Americans in coming years.
''We are reaching the decision points, . . . and voices are being raised somewhat,'' acknowledged a Ford Motor Company official.
On one side of the dispute is the giant General Motors Company, which is pursuing what competitors call a ''Japanese strategy'': In order to boost its presence in the subcompact-car market, where the Asian nation dominates, GM plans to import a total of 300,000 Suzuki and Isuzu vehicles for sale under its labels in 1985. It also wants to make 200,000 more small cars in a California-based joint venture with Toyota, the largest Japanese carmaker.
''From GM's standpoint, it is a very smart strategy,'' says John Hammond, an analyst for Data Resources Inc.
The approach has a number of advantages: GM gets cars that are price competitive in a market where Japan enjoys a cost advantage of roughly $1,500. The big automaker would also gain production know-how from its proposed joint venture with Toyota. And since it owns a portion of Suzuki and Isuzu, it would pocket part of the profits on the Suzuki and Isuzu cars GM sells in the US.
The competition thinks the plan is good, too, and they have threatened to try to copy it if they cannot block it.
''If you can't beat them, then you are forced to join them,'' says Harold A. Polling, Ford Motor Company executive vice-president. To overcome the pricing advantage of a GM-Toyota linkup, Ford would probably start a joint venture with its Japanese affiliate, Toyo Kogyo.
But such a deal would take 18 to launch, and it is less appealing to Ford, since the company has already spent at least $1 billion developing its subcompact Escort and Lynx lines.
A Chrysler briefing document says that if GM's plans go through, ''prudent strategic planning would dictate that Chrysler adopt a massive import strategy in order to be competitive.'' However, Chrysler's most likely venture partner, Mitsubishi, has less economic clout than GM's ally, Toyota.
So for these and other reasons, GM's neighbors in Detroit are doing everything they can to thwart GM's Japanese strategy, largely by putting pressure on government decisionmakers. The drumbeat of opposition has been sounded by Chrysler's chairman, Lee Iacocca, and picked up by Ford and American Motors Corporation executives.
For GM's strategy to work, the company must satisfy the Federal Trade Commission that the joint venture would not violate US antitrust laws. And it must persuade the Japanese government to give Isuzu and Suzuki permission to export additional vehicles under a ''voluntary'' export quota system that prevents Japanese companies from exporting more than 1.68 million autos to the United States.
The GM-Toyota joint-venture plan ''is a clear violation of (US) antitrust law ,'' said Harold A. Poling, Ford Motor Company executive vice-president for North American auto operations, at a recent gathering of reporters.
''If this was GM and Toyota of Toledo, they couldn't even talk to each other, '' adds Richard Muller, Chrysler's public affairs director in Washington.
The FTC is expected to rule in October, after Toyota files answers to some agency questions. Late last week, GM announced that it had signed a letter of intent spelling out the right of the United Automobile Workers to represent workers at the joint-venture plant in Fremont, Calif. A joint-venture spokesman denied that this move was designed to pressure the FTC to approve the venture.
The rest of the industry is also bringing pressure on US trade officials to push for continuation of the current quota on Japanese exports now due to expire in March 1984. A letter to US Trade Representative William Brock signed by the chairmen of Ford, Chrysler, and American Motors speaks of the ''urgency of your encouraging Japan to announce a continuation of its restraint program.''
The chairmen continue: ''The recovery in auto demand is far from complete, and US producers still face two serious disadvantages in competing with Japan that are outside of their control - a yen-dollar exchange-rate imbalance of 20- 25 percent and different tax systems that favor Japanese imports.''
Reports from Japan suggest there is some sentiment in the Japanese government to extend quotas for another year if the level is raised. Such a decision could be announced during Mr. Uno's visit.
The quotas might be extended as a way to remove some sources of friction between the US and Japan before President Reagan's visit there in November.
At the moment there is little likelihood Congress will step in and set the level of auto imports from Japan, say House and Senate staff members.
In fact, last week the House Ways and Means Committee voted to report unfavorably to the full House on domestic-content legislation. The measure requires foreign automakers to use a certain percentage of US parts and labor.
Congress is watching the voluntary-quota issue, a Senate staffer involved in trade issues says.
''But that is different from deciding on how large restraints ought to be,'' he adds.