THE STRUGGLING AUTO BUSINESS : THE INDUSTRY : Sales: Although offering quality, the Japanese company failed to gain many American customers. It hopes to retain all 108 workers; most work at the Los Alamitos headquarters.
Daihatsu on Thursday became the little Japanese car company that couldn’t, announcing that it will end production and export of passenger vehicles for the U.S. market later this year.
Despite winning praise from auto critics for the quality of its vehicles, Daihatsu was never able to win a place in American consumers’ hearts after entering the U.S. market in 1988. Its car and truck sales plummeted 40% last year.
“Their products just were never really geared to the U.S. market,” said John Rettie, editor of J.D. Power Associates’ California Report. “The cars are too small.”
Daihatsu America Inc., the U.S. distributor, will continue operating as a parts distributor and will provide service and support services, company officials said.
In addition, Daihatsu will continue selling its HiJet line of industrial vehicles in the United States. The 15-year-old HiJet line generates about $140 million in annual sales, said C.R. (Dick) Brown, executive vice president and chief operating officer of Daihatsu America.
Daihatsu America has 108 employees, most at its Los Alamitos headquarters. Brown said the company hopes to retain all of them.
The decision to halt its U.S. passenger vehicle sales when its 1992 models are gone makes Daihatsu the third foreign car manufacturer--but the first from Japan--to quit the increasingly difficult U.S. market in the past six months. The others were France’s Peugeot and Britain’s Sterling Motor Cars.
Several industry observers said it is unlikely that other Japanese auto makers will also leave the country. But George Peterson, a Santa Ana auto consultant, said Italy’s Alfa Romeo and Yugoslavia’s Yugo might be considering such a move.
“The knockout for Daihatsu, I expect, was the anti-Japan, pro-American feelings developing in this country,” said Arvid Jouppi, a Michigan-based automotive analyst. Other small Japanese car companies, like Suzuki, Isuzu and Subaru, “have stronger financial support for their U.S. operations,” he said.
“It’s probably just as well, with all the anti-Japanese sentiment out there,” said Robert Naste, general sales manager for Whittier Chrysler Plymouth Daihatsu. “It’s not like they’re taking away something we’re making money on.” He said he signed on as a Daihatsu dealer in 1988, hoping that the car maker would become the new Honda.
Daihatsu, which remains a strong performer in the small-car market in Japan and nearly 130 foreign markets, entered the U.S. market with a single model--the three-door hatchback Charade subcompact. In 1990, it added a four-door Charade sedan and the Rocky, a Jeep-like sport utility vehicle.
Daihatsu America also was “hamstrung by a very low import quota and was never able to support the kind of national advertising campaign it takes to get off the ground,” Peterson said.
In 1990, its best year, Daihatsu America sold 14,984 vehicles in the United States. Last year, it sold only 8,963 vehicles. Its U.S. revenue dropped to about $100 million in 1991 from $130 million in 1990.
Brown, an industry veteran and former Chrysler Corp. executive, said Daihatsu’s decision came after a year of study that “helped us determine that it simply would not be financially sound to keep selling cars in the United States.”
Daihatsu America said it will continue honoring all vehicle warranties.
“Because existing new vehicle, emissions and corrosion warranties continue for various periods of time and mileage,” he said, “we expect to be active in the United States for many years to come.” In California, Daihatsu vehicles are sold with seven-year or 70,000 mile warranties.
“We hope most of our existing dealers will continue to offer parts and service to the 50,000 people who have bought Daihatsus,” Brown said.
He said Daihatsu has about a six-month supply of 1992 product for its 200 U.S. dealers to sell.
Because Daihatsus are sold as a secondary line at all of the company’s U.S. dealerships, the dealers won’t necessarily close when Daihatsu sales are halted.
“This is not a pleasant thing to do,” Brown said. “But it is not fatal. We are still going to be here.”
Brown will remain as chief operating officer of the company. After leaving Chrysler, Brown headed Mazda Motors of America from its inception in 1971 until 1975--a rocky period for that company. He was also president of the ill-fated De Lorean Motor Cars of America from 1978 until 1982.
“I’ve been in tougher situations than this,” he said.
Daihatsu Annual Sales
Daihatsu sold only one model, the three-door Charade hatchback, in the United States in 1988 and 1989. The company added a four-door Charade sedan and the Rocky sport utility vehicle in 1990.
Year: Vehicles
1988: 11,460
1989: 15,409
1990: 14,984
1991: 8,963
Source: Daihatsu
