Japan churns out 'American' cars Trade-bashing U.S. auto officials overlook their Asian supply line

THE BALTIMORE SUN

NAGOYA, Japan -- When Lee A. Iacocca, the chairman of Chrysler Corp., demands that America take a stand against Japanese car imports surely he must not be talking about car No. 11AMRXML2D19W-C06. It rolled off the line here the other day.

The car was produced by teams of Japanese workers all wearing neat uniforms with "Mitsubishi Motors" emblazoned on the back. But the sporty, bright red model is a Dodge Stealth, made by Mitsubishi, and sold in America starting at about $17,000.

And the only thing that makes it seem American is the word "Dodge" etched in the front bumper.

Mr. Iacocca made no mention of Mitsubishi's Nagoya plant when he visited Japan with President Bush in January, and these days people at the plant say as little as possible about the outspoken Mr. Iacocca.

"We feel a little funny about him," Kozo Naruse, the deputy general manager, conceded the other day, shaking his head. "Here he is talking about keeping Japanese cars out of America, and every day we come to work and make very good Chryslers."

As a "buy American" movement in the United States provokes continuing confusion about what constitutes the more American car -- is it better to buy a Honda made in Ohio, or a Ford minivan also produced in Ohio in a joint venture with Nissan? There is little question about the national origin of the 164,352 vehicles produced in Japan last year and sold as Chryslers, Dodges and Chevrolets. They are thoroughly Japanese.

But the fact that they keep pouring off the production lines headed for U.S. dealerships says a lot about the Big Three's continuing dependence on Japanese manufacturing at a time when, for example, General Motors Corp. is announcing plant closings and the layoffs of thousands of workers.

Moreover, many analysts point out, the Japanese production raises questions about how an obvious opportunity to break into the Japanese auto market has been largely squandered by Chrysler, which owns nearly 11 percent of Mitsubishi Motors Corp., and GM, which owns a stake in Isuzu Motors.

Among the Big Three, only Ford Motor Co. uses its Japanese partner, Mazda Motor, to make cars for sale to Japanese consumers rather than for export to America.

Without question, the cars Japanese makers produce for the Big Three account for a significant part of the American market. Last year Japanese cars accounted for a bit more than 30 percent of the American market, up from 27.8 percent the year before.

But if you include autos made for GM and Chrysler here, and at Japanese or joint-venture "transplants" in America, the true Japanese market share exceeded 36 percent. In one way, the figure is even higher: By some estimates the Japanese share of retail auto sales in America -- excluding Detroit's sales to the car rental fleets -- is close to 50 percent.

What makes the Mitsubishi-Chrysler arrangement particularly noteworthy, though, is that by Chrysler's own description it has been an overwhelming success.

"The Stealth is one of our hottest cars, even in a depressed market," said Luis Franco, who heads Chrysler International's liaison office here. "Obviously, we are very happy with Mitsubishi as a supplier and partner."

But Mitsubishi's executives openly cringe at Mr. Iacocca's oratory, and in a subtle way they have begun to fight back. In recent weeks, Mitsubishi's top American officer, Richard D. Recchia, formerly of Chrysler, has done what other Japanese automakers have been loath to try: He has taken Mr. Iacocca head on.

The conflict between the two has stepped up since Mr. Iacocca, returning from Tokyo, declared that the United States was being transformed into an exploited colony, exporting raw materials to Japan, and buying back expensive manufactured goods.

When Mr. Recchia told the National Automobile Dealers Association recently that anti-Japanese feeling in Detroit has "reached down to tap latent racial prejudice," his comments were prominently reported here.

So was his contention that legislation to limit Japan's American market presence proposed by Richard A. Gephardt of Missouri, the House majority leader, and Sen. Donald W. Riegle, D-Mich., would cost thousands of American jobs and "perpetuate fundamental problems in the U.S. economy."

"I can't help but believe that the emotional response we see today is in some way attributable to coments from politicians and U.S. executives following that trip," he said to the dealers who met for their annual convention in Dallas.

A senior Japanese executive of Mitsubishi said of Mr. Recchia: "He is saying aloud what we can't say. It means a lot more coming from an American than from one of us." But others are not so sure. "It never helps to argue back," one senior executive at Toyota said recently.

For Chrysler, the Nagoya plant may be a place to learn some important manufacturing lessons. Though the plant itself is among Mitsubishi Motors' oldest, it has been tooled to place many different models on the same production line, an idea that General Motors and others in Detroit want to copy.

Mitsubishi intersperses production of Chrysler's Stealth with Mitsubishi's own new luxury car, the $25,000 Diamante.

A chart on the wall shows that even now, with the plant operating well below capacity, productivity gains are impressive.

Still, Chrysler's presence in Japan is minuscule. Last year it sold roughly 1,000 cars here, the worst sales record of any of the Big Three, and even far behind Honda of America, which shipped thousands of its U.S.-made Accords to Japanese showrooms.

Mr. Iacocca, during his trip with Mr. Bush, argued that the numbers were so low because of the tremendous cost of meeting Japanese technical specifications, passing Japanese car inspections, and shipping cars from America to Japan.

On the surface, it would seem as if the Nagoya plant would offer an easy solution: The plant is already tooled to produce cars for the Japanese market, even with the steering wheel on the right side. But in Nagoya you cannot buy a Nagoya-made Chrysler. Mr. Franco said that Mitsubishi and Chrysler had periodically discussed such an arrangement, but neither side had taken the conversation very far.

"You have to remember, we have only been selling here since 1987," he said. "It is still pretty early." Moreover, he said, it would make little sense to put a Stealth and its Mitsubishi equivalent sold in Japan, the GTO,in the same showroom. "That would have nothing going for it," he said.

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