Falling dollar opens long-closed overseas doors to US carmakers
About a month from now, the Chrysler Corporation will load a shipment of mini-vans on board a freighter for the slow trip to Europe; it will mark the first time America's No. 3 carmaker has exported cars to Europe in close to a decade. Next year, Chrysler will also introduce its LeBaron coupe to consumers in West Germany, Belgium, Switzerland, Austria, and the Netherlands. During 1988, the carmaker hopes to sell as many as 10,000 American-made cars and light trucks in Europe, but eventually hopes to sell 100,000 annually.
Chrysler is not alone in planning a big increase in its exports. As the American dollar continues to plunge against such key foreign currencies as the West German mark and Japanese yen, it is making American-made products more cost-competitive on world markets. This, auto industry executives hope, will open up long-closed doors in Europe and Japan.
Last week, Robert C. Stempel, General Motors Corporation's president, announced that the automaker would seek to sell at least 10,000 cars in Europe next year, more than doubling its 1987 volume.
GM also plans to go into partnership with its Japanese affiliate, the automaker Suzuki, to develop a distribution network for its cars in Japan. Next year, GM hopes to ship about 1,000 of its Chevrolet Corsica and Beretta and Pontiac Grand Am models to Japan.
The Ford Motor Company is also looking to expand markets in Europe and Japan. All told, Ford's exports totaled roughly 11,000 US-made vehicles in 1986, but ``in 1987, we should double that number,'' says Robert Martin, marketing services manager for Ford international export sales. By the end of the decade, he says, Ford hopes to export between 50,000 and 100,000 vehicles annually.
Though the image of shiploads of American-made cars unloading in the port of Yokohama may be more dramatic, Ford's most aggressive export plans center on Europe, where it already has a well-established dealer network.
Until now, the only outlet for American-made Ford cars has been in the Netherlands, and there it has been only a few hundred vehicles a year. But in 1988, Ford's Swedish dealers will begin distributing eight American-made product lines, including the Taurus station wagon, the Mustang GT, the Bronco sports utility vehicles, and mini- and full-size vans.
In the immediate postwar years, US-made automobiles were relatively commonplace throughout the world. But in recent years, the market has all but dried up. In 1979, for example, American motor vehicles exports totaled 255,653, according to the Motor Vehicle Manufacturers Association. By 1986, the association reports that number had dropped to 43,376.
But by the early to mid-1990s, says David Cole, head of the Center for the Study of Automotive Transportation at the University of Michigan, ``I think it's very realistic ... [that] in the early 1990s, we could easily see in excess of a couple hundred thousand cars and light trucks a year'' exported from the United States.
There are several reasons why US carmakers feel they can again build on foreign demand. For one thing, ``We have newer, more technically astute products,'' says Ford's Mr. Martin, noting that there has been improvement since the beginning of the decade, when American-made automobiles were seen as lagging Japanese and European car quality and design.
But clearly, the big difference today is the value of the American dollar. Take the typical Ford Taurus, which may set back an American consumer about $15,000. In 1985, when it took 230 yen to buy a dollar, that Taurus would have cost a Japanese consumer 6.25 million yen. Today, however, with the dollar worth barely 135 yen, that same car would cost 4 million yen.
US carmakers aren't the only ones thinking far more aggressively about exporting American-made products. The decline of the dollar has put a squeeze on Japanese carmakers, who have been forced to raise prices on their import models repeatedly over the past two years. At the same time, however, the switch in currency values has made the American investments of the Japanese far more sensible than anyone might have suspected five years ago, when Honda opened the first Japanese auto plant in the US.
Honda recently announced it would build a second US plant, scheduled to go into operation in late 1989, building a new version of the compact Honda Accord. A sizable portion of the new plant's output will be aimed at the export market, says Tetsuo Chino, head of Honda North America. ``By 1991, we expect to export 70,000 cars per year to Japan and other countries,'' he says.
Honda is not alone among the Japanese. Mazda Motors would like to export some of the cars it is building at its new Flat Rock, Mich., assembly plant. Toyota exports to Japan several thousand American-made convertibles each year. And several other Japanese carmakers are expected to use their new American plants as a production base for exports as more such plants begin operations.
Not everyone is convinced the US will be able to expand its export market. The biggest concern is that despite improvements in the quality and design of American-made products, foreign buyers may still not believe they match up to European and Japanese standards.
``The major selling point for American-made cars is the weak dollar,'' says Michael Luckey, an auto analyst with Shearson Lehman Brothers. ``If in a few years the dollar is stronger against the yen and the mark, you'll see American car sales dry up.''