Ford Motor Co., the nation's second-largest automaker, may have to abandon production of small cars in the United States if General Motors Corp. succeeds in replacing its current U.S.-built small-car fleet with Japanese models, a top Ford executive said today.
Such a development would leave only Chrysler Corp. and American Motors Corp. as U.S.-based producers of small cars. And Chrysler officials already have signaled that they, too, will look to Japan for most of their small-car needs if the Japanese government approves GM's request to import nearly 300,000 small cars and if the U.S. government allows GM to enter a joint production agreement with Toyota Motor Corp.
"If GM goes through with its strategy, that would put us at a relative disadvantage" in the domestic small-car market, said Harold A. Poling, executive vice president of Ford's North American automotive operations.
"If we can't beat them, we'll have to join them" in bringing in Japanese small cars, Poling said in an interview here following a gala introduction of 1984 Ford and Lincoln-Mercury cars and trucks.
Ford already has invested more than $1 billion in the development of its subcompact Escort and Lynx lines, and is planning to spend another $7 billion over the next two years to build new cars and plants in North America. Ford officials said today that it is conceivable that as much as $1 billion of the planned investment could go into the domestic production of small cars.
But Poling said Ford would have to rethink its investment strategy if GM gets what it wants from the Japanese and U.S. governments.
Japanese automakers, for a variety of reasons, can produce small cars at a unit cost that is $1,500 to $2,000 below the cost of manufacturing comparable American models, Poling said.
If GM gains access to those cars, "that would be a decided advantage for General Motors," he told reporters in news conference comments.
"I think you have to put it in perspective. You have to be competitive in the market arena," Poling said.
GM officials consistently have denied competitors' charges that GM's so-called "Japan strategy" is designed to transfer most domestic small-car production overseas. GM says it simply will rely on the Japanese for small cars until it can learn how to produce them as efficiently as Japanese automakers do.
In keeping with that strategy, GM says it wants an annual import limit of nearly 100,000 small cars from Isuzu and 200,000 from Suzuki beginning with the 1985 model year. Those imports would be sold in the United States under GM labels.
In order to get the Isuzus and Suzukis, GM must get a waiver on the current "voluntary" annual quotas on Japanese cars exported to the United States. Under those quotas, which have been in effect since 1981, Japan can send only 1.68 million cars a year to this country. Isuzu exports are limited to about 16,000 cars, and Suzuki can ship no cars to the United States under the current quota system.
GM also wants the Federal Trade Commission to approve a joint venture in which GM and Toyota would build 200,000 small cars annually at a former GM plant in Fremont, Calif. Collectively, the imports and joint-venture products would give GM 500,000 small cars a year at a very low production cost.
Chrysler has lost a major lobbying campaign to block GM's efforts. And Poling said today that he supports Chrysler's counterattack, at least in spirit. "I am sympathetic to whatever concerns that Chrysler would express on that point," Poling said.
But Ford also is taking steps to protect itself in the event that GM prevails, Poling and other Ford officials indicated. Ford, for example, is talking to Toyo-Kogyo, makers of Mazda, "about all sorts of possibilities"--including a Ford-Toyo-Kogyo joint production venture or import arrangement.
In the interim, Poling said that Ford is prepared to do battle with Japan and GM on American soil. Ford's 1984 lineup should capture at least 20 percent of the domestic market, he said. Ford currently accounts for about 18 percent of the cars sold in the United States.