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Wednesday, Oct. 29, 1997

Big Three's troubles blamed on ignoring consumer desires

Big Three's troubles blamed on ignoring consumer desires> Staff writer

The Big Three U.S. automakers complaining about access to the Japanese market need advice, according to an executive of the Japan Automobile Manufacturers Association: make a little more effort to offer products that consumers want.

Gaining access "all depends on whether they can deliver products that match customers' needs," said JAMA Vice Chairman Takao Tominaga, who is also executive managing director for the industry group. He cited the continuing success of German automakers, such as Volkswagen and Daimler-Benz, despite the prolonged slump in the economy.

"In that sense, the Big Three may be lacking (in) their efforts," Tominaga told The Japan Times in a recent interview.

Earlier this month, Japan and the U.S. held annual followup talks on the 1995 bilateral trade agreement governing automobiles and auto parts. Unlike the talks 2 years ago, the meetings managed to avoid a resurgence of trade friction, but differences of opinion over ways to open the Japanese market still seem to remain between the two nations.

During the three-day meeting, the U.S. reportedly expressed strong concerns over the slow pace of Japan's deregulation moves, and the sagging sales of U.S. vehicles and replacement parts. The U.S. also was reportedly disappointed by the relatively small number of dealerships U.S. carmakers had acquired in the past two years.

U.S. automakers aimed at getting 200 additional dealerships in Japan by the end of last year, but they had obtained only 137 outlets as of Sept. 30, Tominaga said. "Some of them may be suspicious that Japanese auto manufacturers are trying to disturb their efforts to increase their dealers, but that's not true," the JAMA executive stressed.

Unless the U.S. carmakers bring attractive products to the market, dealers will be reluctant to sell their cars, he said. According to Tominaga, Japanese consumer tastes have diversified and the import market has expanded to about 10 percent the size of Japan's passenger car market. That should work in favor of foreign auto manufacturers, he said. "There is room for the Big Three to enter a niche market. There are various ways to penetrate the market," he said. Two possibilities are to introduce new models to a popular segment of sports utility vehicles and to make continuous efforts to bring in right-hand-drive vehicles, Tominaga said.

The purchase of U.S. parts by Japanese automakers has been steadily increasing and will continue to rise as the import car market expands in Japan, he said, adding, "The number will not jump in one day, but it will steadily grow."

Tominaga admitted the rising Japanese auto exports to the U.S. have surged this year due to the lack of supply in the U.S. market and the weakness of the yen against the dollar. Executives from the Big Three, who visited the Tokyo Motor Show last week, called for a stronger yen to prevent more Japanese exports from entering the U.S. market.

However, Tominaga argued that the export rate has slowed a great deal recently. For example, overall Japanese auto exports increased 41.6 percent in August from a year ago, but those in September rose 25.1 percent from the previous year, according to JAMA.

"Because the sports utility vehicles have become very popular in the U.S., the Japanese automakers there are currently short on products. Once their plants in the U.S. increase production volume and the Japanese manufacturers become able to supply enough products, the volume of exports from Japan will decline," he said. "Nobody wants to do things that may lead to trade friction, and everyone is conducting business with that in mind," he said.

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The Japan Times

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