Outlook for the ‘90s : ...

The American auto industry underwent more wrenching change in the 1980s than in any era since the end of World War II.

The decade began with an energy crunch and an economic slump that left Detroit’s Big Three reeling.

It is ending with the Big Three slipping once more into recession and their Japanese rivals still setting the pace in the car market. Despite a multibillion-dollar drive by the domestic industry to catch up, Detroit never has been able to match Japanese car makers on quality.

And car buyers are increasingly turning their backs on the domestics. In 1980, Japanese manufacturers held 19.7% of the American car market; today, they have 24.66%, a figure held back by import quotas imposed in 1981.

Now, the Japanese are leapfrogging Detroit to compete head-on with European firms in the luxury market, and, as a result, sales of pricey West German and British cars are starting to slide.

Meanwhile, Japanese car makers have moved much of their production to the United States in order to skirt trade restraints. They now have eight assembly plants in this country and soon will have the capacity to build 2 million cars and trucks a year here--roughly the same as Chrysler’s North American production.

To compete, Detroit has been forced to form a complex web of joint ventures with Japanese and European companies. Ford, for instance, now counts on Mazda of Japan for its subcompact development, Kia of Korea to assemble its smallest cars and Ford of Europe to develop its mid-size cars. Meanwhile, it has just purchased Jaguar to compete with the German luxury car builders.

As the 1990s begin, import restraints remain in place on Japanese cars but now seem irrelevant because of Japan’s U.S. production facilities. The major Japanese auto makers are not even filling their quota allocations from Japan because they are selling so many American-built cars.

Throughout the 1990s, look for Japanese car makers to take on an increasingly American look.