Japanese Expected to Boost Imports of Cars Sharply
The head of BMW Japan predicts that imported autos will account for 20% of the Japanese market by 1995, and he praises Japan for eliminating all non-tariff barriers to car imports.
Luder Paysen, president of BMW Japan, said in a talk last week to the Foreign Correspondents Club here that abolition April 1 of an excise tax system that penalizes large cars--he called it Japan’s last non-tariff barrier--and an upward swing in the Japanese standard of living promise an “extremely bright” future for imports.
Annual foreign sales will rise to about 800,000 cars by 1995, or six times last year’s level, he predicted. But he said American auto firms are not expected to benefit because they are not trying to sell in Japan.
The Japan Auto Workers Federation has indicated that imports might rise to as high as 500,000 cars a year, but most Japanese auto executives and analysts foresee about 300,000 by 1995.
European manufacturers will sell about 400,000 cars annually by 1995, while 400,000 more will come in from the United States and the newly industrialized countries in Asia, Paysen said. But, he added, nearly all the American-made imports will come from Japanese-owned factories in the United States.
Paysen said the combined total of 800,000 cars will account for about 20% of the Japanese market, a huge increase over last year’s record imports of 133,583 cars--3.7% of the market, excluding “midget cars.”
Detroit’s Big Three could find a market for their products, he said, and “would produce better cars . . . if they competed in Japan,” a market he called the most competitive in the world with the most demanding customers. But American manufacturers, he said, “have a different strategy--to put it as politely as I can.”
He said Americans should remember that when sales of imported cars peaked earlier, in 1969, half of them were American.
“Japanese like foreign cars--if they are given a chance to buy them,” Paysen said.
Kenji Kawai, a Ford spokesman, took issue with the charge that American auto makers are not trying to compete in Japan. He said that in addition to the Ford-designed Probe, which is manufactured at a Mazda plant in the United States, Ford started sending its Taurus model to Japan last year and plans to begin exports to Japan of both the Continental and the Thunderbird this year.
West Germans Sell Most
Kawai acknowledged, however, that Ford failed to meet its first-year goal of 1,000 units for the Taurus, selling only 642 in 1988.
With Volkswagen’s 27,947 imports in the lead and BMW’s 26,826 close behind, West German makers sold 91,648 cars, 69% of Japan’s imports last year. American-made imports, mostly from Japanese-owned factories in the United States, amounted to 14,511 units.
Paysen said that BMW’s gains from 3,187 imports in 1981, when it became the first foreign car manufacturer to set up its own independent dealer network here, were achieved because of the dismantling of non-tariff barriers and a change in Japanese consumer mentality.
“Even a ban on foreign cars using Japanese parking lots once stood in the way of imports,” Paysen said.
To the Japanese, 90% of whom believe they belong to the middle class, “what the neighbors think is important,” Paysen said. He said that four or five years ago the perceived ostentation of driving a BMW was not socially acceptable, but now, except for senior executives of large companies who still feel that they must ride in a Japanese car, the Japanese adage that “the nail that protrudes gets hammered down” is “a thing of the past.”
Former Prime Minister Yasuhiro Nakasone’s 1985 appeal to the Japanese people to buy more imports “sounded silly at the time, but it worked,” he said. “Our products are socially acceptable in Japan now.”
He said the Japanese life style is changing rapidly, “from group orientation to individual orientation as people seek higher quality and more individuality.” And he said the Japanese producers are promoting this change by developing upscale models in BMW’s price range of around $40,000.
Had Wrong Impressions
Sales of domestic and foreign luxury models with price tags of $24,000 and up more than doubled from 1985 to 1988, to 400,000 units, and will double again by 1995, Paysen predicted. Growth of this market segment, he said, will provide most of the spur for future import gains.
He said BMW had to overcome an impression among Japanese that the company’s initials stood for British Motor Works instead of Bavarian Motor Works. And it also had to overcome a Japanese impression that all foreign cars were “gas guzzlers, unreliable, oversized and overpriced . . . exotic cars suitable only for gangsters.”
“Our long-term dream of gaining 1% of the market will come true in two to three years,” he said, “but I don’t believe this will be the end of the story.”
Demand for imports, he said, will continue to rise even if the yen reverses itself and loses value in relation to the dollar or the West German mark.
