Slices of Japanese business, politics and life
Yes, there is a difference between American and Japanese cars
A lot of words have been written in the past few post-tsunami weeks about the negative impact of the disastrous tragedy on the short-term future of Japanese cars in the U.S. market. In parallel, many articles proclaim this to be a “historical window of opportunity” for the “Detroit Three,” now able to deliver to waiting customers an abundant supply of new vehicles while, at Toyota, Honda and Nissan, the cupboard is bare.
It’s telling that we’re *not* hearing the Japanese-brands inspired propaganda offensive of a few years back, when the media duly repeated that “there is no longer such a thing as an American car or a Japanese car.” The Japanese, it was stated, now all have plants in the U.S., whereas most U..S companies import components from the Far East, or Latin America, thus compromising the promise of saving U.S. jobs. For buyers with a patriotic streak, it was all-American-apple-pie-OK to buy a Japanese brand, these being “just as American” as a Ford, Chevrolet, Dodge or Jeep. The (then) World’s Smartest and Finest Car Company, Toyota, even placed ads asking who’s more American? Toyota USA, adding manufacturing jobs and plants in the U.S., or the Detroit Three, busily, at that time, laying off workers and shuttering plants?
Fast-forward to the earthquake and tidal wave of 2011: the allegedly red-white-and blue Japanese brands suddenly find their supply lines dried up, while the supposedly import-component laden domestic cars, (albeit with some minor work-around shortages) continue to deliver a river of new vehicles, unabated. And, thus, another popular myth bites the dust.
In the past months the Detroit Three have, in fact, come roaring back. The Chevrolet Malibu, the 2007 “Car of the Year,” has shouldered past the Japanese brands and is now the number one car in the mid-size segment. Even more astonishing is the Chevrolet “Cruze,” a best seller around the world, and now America’s number one compact car, relegating the perennial favorites, Honda Civic and Toyota Corolla, to the runner-up spots.
Will all this Detroit resurgence be reversed when Japanese car supplies build up again? I predict it will not.
The current weakness of the Japanese brands goes beyond the natural catastrophe that slowed output. The roots of the end of the nation’s infatuation with Japanese cars go way deeper; more profound, underlying factors are at work. The manifest ineptness on the part of Toyota in dealing with the unintended acceleration crisis has permanently taken that company from “God-like” to “just another good car company.” They, and other Japanese brands, have also suddenly developed a curious inability to produce winning designs. Gone are the Hondas that scream “buy me” thanks to their lovely proportions and superb interior: evidence of the cost-cutting now abounds.
This sudden weakening of the product is accompanied by massive, unprecedented strides by the domestics: rather than the embarrassing exercises in mediocrity that formerly emanated from Detroit, “the three” are now fielding the most competitive products in their history. Whether Buick, Cadillac, Dodge, Jeep or Ford, Detroit’s new offerings, from Camaro to the Sonic, are beautifully-styled, superbly-crafted, presenting world-class ride and handling with fuel economy better than the Japanese rivals. After 30 years of less-than-stellar focus on cars, a restructured and re-energized Detroit is out to conquer with cars that, viewed objectively, are now nicer and better value than those of Japan. And, since bad news always comes in batches, there’s the dollar-yen relationship: at roughly 80 yen to the dollar, the historic Japanese cost advantage has turned into a millstone, forcing content reductions in the vehicles, narrower profit margins, and higher prices.
Yes, the Japanese will recover somewhat from the current nadir. But the all-conquering days are over. GM, Ford and Chrysler are attacking with a vengeance, this time not with incentives, but with superior products. And let’s not forget the elephant in the room: the rapid growth of Hyundai-Kia, taking away those value-conscious buyers that usually defaulted to Honda and Toyota. All in all, I’d say that, in coming decades the US market will cease to be the golden goose that so richly nourished the coffers of the Japanese car industry. Welcome to the “Tough road, hard work” club, guys!