Japan produced its first car in 1902 -- a steam vehicle made mostly from imported parts.

In 1940, Japan manufactured 46,000 four-wheeled vehicles and 8,300 three-wheeled trucks. Most of those vehicles were assembled with imported parts, too.

Japanese auto production virtually halted during World War II, but resumed again after the war ended. Trucks were the first vehicles to roll off Japanese assembly lines in the postwar period. Cars soon followed -- under the protection of new laws that shielded the fledgling Japanese auto industry from foreign competition.

When the oil crises of the 1970s created an instant demand for small cars, Japanese auto makers took their show on the road and drove to glory.

In 1970, some 23 percent of Japanese auto production was exported. In 1984, the 13 Japanese auto makers produced 11.5 million cars, buses and trucks. They exported 6.1 million units, or about 53 percent of last year's production.

Most of Japan's 1984 exports -- 2.6 million cars, buses and trucks -- wound up in the United States, which is the world's largest, most lucrative and most open auto market. Officially, operating under so-called voluntary quotas in effect since April 1, 1981, the Japanese sold 1.85 million passenger cars in this country last year.

But the latest available estimates from the United States International Trade Commission (February 1985) indicate that the Japanese actually sold 1.95 million passenger cars in the United States between January 1984 and December 1984, largely because of units brought in from third-party territories. That means that imported Japanese cars constituted 18 1/2 percent of the 10.5 million passenger cars sold in America last year.

By comparison, imports -- 41,982 passenger cars, 177 trucks and no buses -- accounted for less than 1 percent of the 5.4 million cars, buses and trucks registered as sales in Japan in 1984, according to figures compiled by the Japan Automobile Manufacturers Association Inc.

That imbalance has added to the demands for trade retaliation against Japan from other auto-producing nations.

Italy, for example, limits Japanese auto shipments to its market to 2,400 units a year. France allows the Japanese a 3 percent market share. West Germany and Britain give the Japanese a 10 to 11 percent share of their car markets through informal agreements. Canada limits Japanese auto makers to 166,000 units a year, and Mexico allows no export of Japanese cars to its market.

Korea, Taiwan, Brazil and other Third World countries are developing their own auto industries. And they, too, are raising barriers to foreign competition on their home fronts, while gearing up to export. For example, Korea's Hyundai Motor Co. Ltd., last year sold 40,000 of its Pony subcompact cars in Britain and got off to a good start in Canada.

Hyundai produced an estimated 150,000 cars last year and will increase production to 450,000 units by 1986, according to Ward's Auto World, a Detroit-based auto industry trade journal. Hyundai already has announced plans to attack the Japanese at the low-price end of the U.S. market, where the Korean company plans to sell 100,000 to 150,000 subcompacts a year.

The Korean challenge, albeit tiny now, is putting pressure on the smaller Japanese companies to speed up their drive toward a bigger share of, and stronger presence in, the U.S. market. They can do that best without trade barriers, voluntary or otherwise.

Removal of restrictions thus would mark an important gain for Suzuki Motor Co. Ltd., Japan's sixth-largest auto maker based on 1984 production of 689,871 cars, buses and trucks in Japan; ninth-ranked Isuzu Motors Ltd., which produced 432,257 vehicles last year; and fourth-ranked Mitsubishi Motors Corp., which turned out 1.1 million units in 1984. All three of those auto makers have small shares of the U.S. market. All three also have American partners who will depend on them for small-car supplies if quotas are lifted. Elimination of quotas also could bring some newcomers such as Japan's Daihatsu Motor Co. Ltd. (566,076-unit production in 1984) to the U.S. market.

Japan's three largest players -- Toyota Motor Corp., Nissan Motor Co. Ltd. and Mazda Motor Corp. -- are hedging their bets in the United States either by building cars or planning to build them in this country. They are all following Honda Motor Co. Ltd., Japan's fifth-largest auto maker in terms of production in that country, which started building cars in the United States in 1982.