It doesn't take a reincarnation of Arnold Toynbee to determine that the recent history of the automobile industry ought to be labeled the Japanese Era. Few industries in any nation have enjoyed such rapid growth. Consider that in 1958, Datsun sold only 83 automobiles in the United States. Honda did not market its first automobile until 1963.
Today the Japanese are a dominant force in the worldwide car industry. They are prevented from overwhelming rival carmakers in the United States, Canada and the Common Market only by complex trading agreements, tariffs and import quotas. Given totally free markets, there is no telling how far the tide of Japanese automobiles would sweep. But we are also witnessing intriguing developments that might undo the dominance of the Japanese.
Ironically, some of the stiffest competition for Japan might come from its neighbors in the Far East. Taiwan and Malaysia are gearing up to enter the very bottom of the market, where the Japanese have enjoyed an undisputed reign since the late '60s. South Korean carmakers have already penetrated the market: Hyundai is selling its Excel here, Kia has built the Festiva for Ford, and Daewoo has started building the Pontiac LeMans. These carmakers have made it clear that the Third World, along with Yugoslavia and its Yugo, is about to become a major force in the car business.
Cut out of the low end, the Japanese are looking for new segments of the market to conquer. One is the heart and soul of the American auto business -- the mid-size, mid-price family coupes and sedans such as the Chevrolet Celebrity, the Pontiac 6000 and the Oldsmobile Cutlass. The other is luxury cars, in which the American Lincoln and Cadillac do battle with the West Germans, English, Swedes and Italians.
For a while it seemed that the middle ground of the American market might be easy pickings. The Nissan Maxima, Toyota Cressida, Mazda 626, Honda Accord and other sedans from Japan are neatly conceived, high-value automobiles. They seemed to have no serious American competition until the breakthrough Ford Taurus and its sister, the Mercury Sable, arrived in 1985. These superb cars are able to meet the Japanese mid-sizers head-to-head in terms of price and utility. The Chrysler H-Bodies, known as the Dodge Lancer and Chrysler LeBaron, also are serious contenders, and there is little doubt that the new GM-10 models from General Motors will nibble at Japanese sales.
The Americans are no longer patsies. With the rising value of the yen, the Japanese face the grim prospect of failing to grow -- or even losing ground -- in the vast middle of the American market. That leaves them with little choice but to elevate their sights to the summit of auto sales, where Mercedes-Benz, BMW, Porsche and Jaguar look down from fortress-like positions.
Honda was the first to enter the battle with its new line of Acuras, aggressively pricing the Legend sedan and the new Legend coupe in the $22,000 to $25,000 range. Toyota soon will follow with an independent sales division offering upscale cars, very likely versions of the flashy Crown sedan and Soarer sports coupe sold only at home. Mazda comes in 1988 with its full-size 929, and Nissan is also reported to be considering a big sedan powered by a 4-liter V-8.
Honda's efforts in this part of the market get mixed reviews. Without question, the Acuras are superb automobiles. Most critics rank the Legend coupes and sedans on a plane with, or above, the 3-series BMWs and the Mercedes 190 class. The lower priced Integra, designed to compete with the likes of Saab, Audi and Volvo, also is an exemplary machine and a legitimate bargain. But despite favorable notices, Acuras have not startled anyone. First-year sales will amount to only 53,000 units. Although Honda officials say that number qualifies as a success, many Acura dealers are selling the car for less than the sticker price. Contrast the introduction of the Acura line with the Honda Civic and Accord, and the "success" of the Acura is clearer. People waited three months to get an Accord when it was first offered and gratefully took it in any color available. Civics were back-ordered for months, and dealers were packing thousands onto the sticker prices.
This has not happened with the Acura, and the Japanese are about to crowd the luxury car market even further. While no Japanese manufacturers have professed a desire to assault the icon-like, $40,000-plus BMWs, Jaguars, Mercedes- Benzes, etc., they could be serious rivals for Cadillac, Lincoln, Volvo, Audi, Saab and Peugeot, provided they vault a formidable hurdle called "image."
To be sure, the Japanese are capable of building world-class luxury cars. They accede to no one, not even the West Germans, in terms of technology and quality. But they face a more abstract problem. Image is a crucial factor in selling upscale products. At this point the Japanese are simply not perceived as serious players in the heady realms of thoroughbred automobiles. Repeated polls by the automotive research firm of J.D. Power and Associates tell the story -- the Japanese are seen as producers of low-priced automobiles of excellent quality and value, but their autos are also perceived as lacking in prestige. To many Americans, the Japanese make stalwart rolling appliances, machines devoid of the glamour and the panache now exclusively possessed by a small cadre of European carmakers. Americans still operate as colonials, looking to Europe for symbols of wealth, culture and status.
The stakes have become higher for the once-indomitable Nissan, Toyota and Honda. The Third World is nibbling at their heels, the Americans are slugging away at their midsections, and the Europeans continue to hover over their heads. Subtle market forces are at work here, and the outcome is unsure, with one exception: The smooth road the Japanese have ridden on for two decades has developed some dangerous potholes. ::