U.S.-JAPAN TRADE ACCORD : REACTION IN JAPAN : Progress Could Come Slower Than U.S. Thinks

The U.S.-Japan auto accord might be viewed as a major step toward greater foreign access to the Japanese automotive market, but Japanese officials immediately cautioned that progress may not come as fast as portrayed by the Clinton Administration.

Figures on the number of Japanese dealerships that will carry foreign cars, the number of new repair garages in Japan that may be more likely to use foreign parts, and purchases of American parts by Japanese transplant operations in the United States all are estimates made by Washington--not pledges by the Japanese government or Japanese manufacturers, those officials said.

Japanese business leaders expressed concern that the United States might begin to treat those numbers as commitments by Japan, even though they are not contained in the agreement or in the plans announced by manufacturers.

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“Our announcement today doesn’t directly state how many parts are going to be purchased,” said Taizo Yokoyama, a managing director at Mitsubishi Motors. “Therefore we understand the figures the American side has announced today are calculated upon the estimates they made. I don’t think they will be taken as ones Japanese manufacturers have agreed to.”

Prominent business leader Yotaro Kobayashi, chairman of Fuji Xerox Co., expressed concern that the figures should “not be viewed as something that the Japanese government has promised.”

“I don’t mean to be impolite to the American government, but this is what Japan has been worrying about the most,” Kobayashi said. “But the agreement clearly says that the Japanese government is not guaranteeing it. I strongly hope this is how things will work out.”

Hisashi Hosokawa, an official of the Ministry of International Trade and Industry, stressed at a news conference today that Japan had not committed itself to numerical targets. But he also noted that there is a global perception that the Japanese auto market is difficult for foreign firms to penetrate.

“We do think the government and the business community do have things to improve in the way we conduct imports,” he said.

The Clinton Administration, based on the plans announced by Japanese manufacturers, predicted that by 1998, Japanese auto makers will boost their U.S. production to 2.65 million vehicles from 2.1 million, increase U.S. parts purchases by $6.75 billion, raise to 56% the locally procured components in cars made in the United States and raise annual imports of foreign parts for car assembly in Japan to $6 billion.

Washington also predicts that the agreement will boost dealerships in Japan by 200 in the first year and by 1,000 by the year 2000. It predicts that deregulation of the repair garage system will eventually lead to the establishment of 7,000 to 8,000 new garages that will be more likely to use foreign parts.

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Officially, Japan’s top government spokesman, Chief Cabinet Secretary Kozo Igarashi, expressed satisfaction Thursday that the auto talks “reached a successful conclusion without setting so-called numerical targets.”

The Japan Automobile Dealers Assn., in a statement released Wednesday evening, noted that the number of Japanese dealers in Japan selling foreign cars has grown from 85 in 1988 to 1,127 today.

JADA members intend to enter into more franchise arrangements with foreign manufacturers, the statement said, “if they are diligent enough to satisfy us in the introduction of good prices, so as to enable their products to be competitive with domestic products; in the provision of products in conformity with customers needs . . . and in the provision of quick follow-up services against complaints by customers.”

The statement said JADA “will encourage Japanese auto manufacturers to pursue a policy of reaffirming to the dealers who handle their cars that those dealers are completely free to handle foreign vehicles.” Such reassurances had been a key U.S. demand in the auto talks.

In their joint statement in Geneva, Japanese Trade Minister Ryutaro Hashimoto and U.S. Trade Representative Mickey Kantor noted that the JADA also announced that when a U.S. auto manufacturer informs the association that it wishes to sell a specific new model in Japan, the dealers group “will conduct a survey of its members for the purpose of identifying dealers that have intentions or interest in selling foreign motor vehicles.”

“A list of interested dealers and their respective contact points, as well as major points of the result of the survey, will be communicated back to the company that made the request,” the joint statement said. It noted that neither the foreign manufacturers nor the Japanese dealers would be bound to enter into franchise agreements as a result of this process.

Individual auto companies also issued “voluntary plans” for expanded overseas operations.

Toyota said it plans to boost North American production from 735,000 vehicles in 1994 to 900,000 in 1996 and 1.1 million in 1998. It also announced new measures to encourage imports of foreign parts and reaffirmed that it is considering building a third U.S. plant.

Nissan said it will establish a new engine assembly factory to build 200,000 engines annually in Decherd, Tenn., with production starting in 1997. It said it will increase its efforts to purchase foreign parts both for new cars and repair services. It will also set up a new mechanism to deal with complaints from foreign auto makers that Nissan-affiliated dealers refused to handle their cars, it said.

Honda said it will expand local procurement in North America by producing a new V-6 engine exclusively for the U.S. market and do more to include foreign parts makers in its design process. It will invest $310 million in its North American operations, leading to 1,100 new jobs, with total investment reaching $3.8 billion by 1998. Its total North American work force would then be 17,000.

Mazda said it will expand foreign parts purchases and expand its cooperation with Ford, which owns 25% of Mazda. Mitsubishi Motors said it would increase local content in its transplant operations and “curb to a minimum” its exports of parts and components from Japan.