Mitsubishi Motors Ponders Shifting Into Reverse With Imports : May Join Ranks of Other Firms That Ship Their U.S.-Made Autos to Japanese Market
Mitsubishi Motors is likely to join a growing number of Japanese auto makers to begin “reverse imports” to Japan of Japanese cars manufactured in the United States, according to the company’s president, Toyoo Tate.
“In the fall of next year or in the beginning of (1990),” Tate said in an interview, “we are thinking of importing from the United States.”
Tate’s statement, which he qualified by saying that exchange rates would play a role in the final decision, promises to put Mitsubishi alongside Honda, Nissan and Mazda in the growing ranks of “reverse importers” from the United States.
In an industry that has thrived on exports--51.2% of all vehicles produced were shipped overseas last year--the turnabout has attracted great attention. Yet Tate and other auto executives made it clear that they see only a small role for the Japanese auto industry in Prime Minister Noboru Takeshita’s new policy to absorb more imports and relieve the United States of its burden of serving as the principal market for the world’s manufactured products.
Cautious About Deals
Last year, Japan imported 97,750 cars, or 3% of its passenger car market, excluding “midget cars” with an engine displacement of 550 cubic centimeters or less. Future car imports are expected to reach about 300,000--but not until around 1995.
By comparison, the United States last year imported more than 3 million passenger cars, or 29.8% of its market.
In the United States, Big Three dealers often agree to handle imports in their showrooms, but the Japanese have volunteered little help to foreign firms in selling cars here.
Although Mitsubishi Motors and its affiliate giant, Mitsubishi Trading Co., own 15% of Hyundai Motor Co., Tate’s company will begin importing from its South Korean partner only this month. The goal for the year has been set at 100 cars--a gesture to mark the 1988 Olympics in Seoul.
By contrast, this year Hyundai is expected to sell about 400,000 cars--30,000 of them in Mitsubishi dealers’ American showrooms--in the United States.
Tate insisted that Hyundai itself “is very cautious about selling to Japan.” Charges that Mitsubishi has been “suppressing Hyundai in Japan,” he said, are incorrect.
Other Imports Planned
“Hyundai realizes that, unlike the United States, the market for ‘cars for the masses,’ in both quality and price, is very severe. They are very cautious (about coming into Japan),” he said.
Japanese customers buy an automobile as “a big acquisition of property” and are “very severe” in their demands for quality, right down to how firmly the doors close, he said.
Tate said Mitsubishi and Hyundai would decide on the import of Hyundai’s cars after examining the results of the “trial sales” of the 100 cars in Tokyo and Osaka. But he made it clear that he expected no boom for Hyundai cars.
Indeed, he predicted that Japan’s combined imports would amount to only about 200,000 cars a year “within two or three years,” or less than half the number that Hyundai itself sells to the United States each year. Other executives and analysts have predicted that imports could reach 300,000 by 1995.
Last April, Honda started shipping Accord coupes from its Ohio plant to Japan and plans to sell 4,000 here this year, according to Tetsuo Chino, senior executive director of the firm. By 1990, he added, Honda hopes to raise its annual reverse export of the two-door, leather-upholstered car to 50,000, a figure which could make Honda Japan’s biggest importer.
Mazda plans to import 3,000 Ford Probes manufactured at Flat Rock, Mich., as well as 700 Ford Taurus models this year and, from 1989, increase sales to 6,000 Probes and “more than 1,000” Tauruses a year. Nissan has set a goal to sell 1,000 American-made King Cabs a year sometime in the future.
Imports from other countries are also planned but, again, in only limited quantities. Isuzu, of which General Motors owns a 34.2% share, announced in May that it will import Opel cars from GM’s subsidiary in West Germany. Tobiyama Kazuo, Isuzu president, however, said that if any model of its Opel imports exceeds sales of 1,000 a month, imports of finished cars will be replaced by imports of parts for so-called knockdown assembly of the cars in Japan.
Fuji Heavy Industries, makers of the Subaru, said it will import Volvos from Sweden and sell them in its showrooms. Mitsubishi will start importing 500 station wagons a year from Australia this month.
Even some truck imports were being considered: Volvo products by Isuzu and Daimler-Benz trucks by Mitsubishi.
Common to all the plans was a commitment to bring in only models that do not compete with domestic models. No foreign production is planned to replace manufacturing at home of products for the domestic market.
Costs Remain Cheaper
“We will be making a completely different kind of sporty car in the United States than we make in Japan,” Mitsubishi’s Tate said. It will be a front-wheel drive, two-door sports specialty coupe that will be made at the firm’s joint venture plant with Chrysler Motors in Illinois.
A Mazda executive similarly ruled out importing cars from Kia Motors of South Korea, a Ford-Mazda partner, because Kia’s mainstay vehicle is modeled on a Mazda design. Ford owns 10% of Kia’s stock, while Mazda holds 8% and C. Itoh & Co., a large Japanese trading company, has 2%.
Although the huge appreciation of the yen’s value in the past three years has driven up production costs, executives at Toyota, Nissan and Honda say manufacturing costs in Japan remain cheaper than in their American plants.
The Confederation of Japanese Automobile Workers Unions, in an analysis of the future of the automobile industry, predicted that employment would drop at factories in Japan. But the union said the biggest factor likely to cut automotive jobs was neither transfer of production overseas nor imports but rather expected gains in productivity.
Rated as a secondary factor in reducing employment was the importing of parts.
Despite new efforts by Detroit’s Big Three to increase their paltry exports to Japan--4,008 units in 1987--Shigehira Yoshioka, general manager of the overseas trade department of the Japan Automobile Manufacturers Assn., said he did not expect significant gains.
“The image of an American car is one that runs into engineering trouble right after you buy it,” he said. “Unless that image is changed, not much of a success can be expected” for U.S. car sales here.
Hirohiko Okumura, chief economist of the Nomura Research Institute, predicted that Japanese auto makers in the year 2000 would produce a total of 15.1 million vehicles, with about 30%, or 4.6 million units, in overseas factories. Overseas production at present is variously estimated at between 11% and 13% of total auto manufacturing.
If Okumura’s prediction comes true, Japanese auto makers would achieve a gain of 3 million units in global production at the cost of a 1.6-million production cut at home.
Both the Ministry of International Trade and Industry and the Japan Machinery Exporters Assn. made the same prediction, except MITI forecast that overseas production would reach 30% of total auto manufacturing five years from now and then level off.
Role Reversal
The biggest change in the import picture, nonetheless, was likely to be wrought by the Japanese auto makers themselves.
Chino pointed out that Honda’s planned reverse import of 50,000 cars, by itself, exceeds all of the 40,000 exports, excluding sales to Canada, that Detroit’s Big Three achieved last year.
Including Honda’s plans to export 10,000 other cars from its factory in the United States to Taiwan and South Korea, Honda America, he added, may become the United States’ No. 1 overseas car exporter.
