U.S. drive to sell autos in Japan stalls Deal was hallmark of Bush's visit

THE BALTIMORE SUN

TOKYO -- The most touted accomplishment of President Bush's troubled January trip here to push "jobs, jobs, jobs" for American workers is bogged down and touching off new sparks of controversy in auto trade between Japan and the United States.

Nine months after the president's visit yielded an offer by Japan's BigFive automakers to import and distribute 19,000 vehicles from America's Big Three by 1994, only Honda Motors Inc. has turned the offer into increased sales for an American counterpart, Chrysler Corp.

A Honda spokesman said yesterday that his company would easily meet the agreed-upon goal of tripling the 1,200 vehicles a year -- mostly Cherokees and Jeep Wranglers -- that Honda brought in last year.

Spokesmen for the four other automakers said yesterday that they have not reached agreement with their American counterparts on how to implement the targets, which were intended to add to the 35,000 Big Three cars already imported here each year.

Nissan Motors, whose president expressed distaste for the entire process in the months after the visit, said it has had no meetings with its suggested counterpart, Ford Motor Co.

"Ford never came forward with a proposal" on Nissan's offer to handle an estimated 3,000 vehicles, mainly minivans and Taurus sedans, a Nissan spokesman said yesterday.

Nissan hedged its offer, however, with a requirement that the vehicles have steering wheels on the right side, as is standard in Japan. Big Three makers have long insisted that that would require retooling that was far too expensive for small-lot sales.

A Ford spokesman in Washington said that Nissan made the original proposal before consulting with Ford and that the proposal was never viable.

Mitsubishi Motors also expects to put off its imports under the plan until 1995 or beyond, a company spokesman said yesterday. The company is still negotiating with Chrysler -- with which it has a long-standing relationship -- for models the American automaker is still developing.

With palpable reluctance in most cases, Japan's biggest automakers announced the 19,000-vehicle target under the combined pressure of Japan's government and Mr. Bush's high-profile trade mission, on which he brought along the heads of all three top American auto companies.

The offer was "pieced together in a hurry because everyone felt a need for something to show under the combined political pressure of a recession-year election in the States and then-newly installed Prime Minister Kiichi Miyazawa here, who badly needed his first visit from Mr. Bush to succeed," said a source who tracks the auto trade.

"There were no details at the time, and it's not surprising that now it's hard to make it actually work on both sides."

Toyota's dim hopes for talks

This week, Tatsuro Toyoda, the new president of Toyota Motor Car Co., touched off a new controversy by saying his company sees little hope for the slow-paced talks with General Motors Corp. on its 5,000-car target.

"There is no negotiation about sales at all and no future prospect," Mr. Toyoda told the Asahi newspaper Monday. Instead, he said, Toyota "has begun importing Toyota cars manufactured in the United States."

"Even if Toyota cannot sell GM cars in Japan, we can achieve the goal of contributing to the American auto industry by importing American-made cars" from Toyota's U.S. factories, Toyota's new president said. Toyota began last month to import station wagons from its plant in Kentucky, increasing the plant's exports to Japan to 468 from 16 during the previous September.

But at a news conference here after Mr. Bush's visit, American Big Three executives vehemently opposed any suggestion that cars from Japan's U.S. factories would be an acceptable solution to the intense friction in the auto trade.

"What the Japanese make in their plants, here or in the U.S., doesn't count," Harold L. "Red" Poling, president of Ford, said at the time.

Two of the Japanese makers, Mitsubishi and Mazda, have restructured relations with American companies since January. Indeed, for those two automakers and their counterparts Ford and Chrysler, announcements made during the Bush "jobs, jobs, jobs" mission could become irrelevant before they can be executed.

"Ford has increased its ownership stake in Mazda and seems to be making all the moves to take command of its own import future in Japan," said the source, who spoke only on the condition of anonymity. "Mitsubishi bought out Chrysler's share of their Diamond Star joint venture in the States to give Chrysler a capital infusion."

Ford has set up its own Japanese import operation since January, and a Mazda spokesman said yesterday that his company sold 1,300 Ford cars from April through September, a 26 percent increase over the same period last year. Those cars were not included in the January offer, and no agreement specifically aimed at executing that offer was in sight, he said.

GM-Toyota talks

Officials of General Motors Japan Inc. learned of Mr. Toyoda's feelings only after company staff members translated his

comments from Japanese from Tuesday morning newspapers, said Sachiyo Tateno, a spokeswoman for GM here.

"So far as we're concerned, these discussions are still going on, and Mr. Durrie is very much counting on Toyota to sell GM cars," Ms. Tateno said. Michael Durrie is president of GM Japan. He was away from his office Tuesday, and Ms. Tateno said yesterday that he was too busy to take a reporter's questions about Mr. Toyoda's comments.

But in an interview with The Sun last week, he said GM was "meeting with Toyota regularly to work on the offer they made during President Bush's visit to sell 5,000 GM cars by 1994."

"We think the 1993 GM models include several strong candidates," he added.

Kimiake Kuroki, a Toyota spokesman, sought yesterday to soften the impact of Mr. Toyoda's comments.

The Asahi article "presented the interview in a very negative way" and "was very exaggerated," he said. Asked several times about specific quotations in the article, he repeatedly stopped short of denying that Mr. Toyoda had made the statements.

"Progress has been much slower than we expected in January," he acknowledged, and no agreement has been reached on how to implement the 5,000-vehicle offer Toyota made to GM.

He added that Toyota does not consider this year's rising imports from its U.S. plants to be substitutes for whatever can be done under the January announcements.

"The discussions have not been cut off," Mr. Kuroki said. "Our door is always open."

Industry sources said yesterday that although the 19,000-car offer seems stalled, a plan to double imports of U.S. auto parts to Japan, to $4 billion by 1994, seems on track.

"Toyota, in particular, seems very seriously committed to making that work," the source who tracks the auto trade said. Mr. Durrie also said last week that parts talks, especially with Toyota, were advancing well. Precise figures on parts sales were unavailable.

Partly because it involved the world's two biggest automakers, the 5,000-vehicle Toyota-GM offer received the most publicity after the unprecedented meeting between the corporate heads of Detroit's Big Three and Japans Big Five during the Bush visit.

But Toyota officials expressed no enthusiasm for the arrangement, which was pressed on them by Prime Minister Miyazawa, seeking to mollify the stormy protests of U.S. automakers accompanying the president to Japan.

Just before Mr. Bush arrived, the prime minister called senior members of the Toyoda family to his official residence after top bureaucrats of the powerful Ministry of International Trade and Industry had failed to bring the company on board.

The Toyota men emerged from the residence unsmiling and remained so five days later throughout a news conference that Japan's Big Five gave after the automakers meeting. Toyota hedged its 5,000-car offer with even more preconditions than did the other Big Five companies.

Since then, Toyota and GM met long enough to open the first showroom for GM cars in Japan, using one floor of Toyota's high-tech Amlux display facility in an upscale Tokyo neighborhood for a month last summer.

Resistance of GM distributor

Mr. Kuroki said yesterday that the hang-up on the 5,000-car offer was the lack of any agreement to the plan by Yanase & Co., GM's Japan distributor for the past 70 years.

Toyota said from the outset that the offer could go forward only if Yanase explicitly concurred. The purported anxiety was that Toyota would be selling cars that might otherwise be sold by Yanase.

A Yanase spokesman acknowledged yesterday that Japanese news reports were correct in saying his company has taken the position that the 5,000-vehicle plan was between GM and Toyota and needed no statement from Yanase.

Mr. Durrie, GM Japan's president, said last week that discussions about the Toyota offer had been sensitive on all sides when it came to Yanase's position.

"Weve got a lot of our eggs in the Yanase basket right now, and it's a long-standing GM relationship that we expect can grow significantly," he said.

Although the talks appeared to be faltering for the sale of GM products here, Germans are making headway through Toyota. Toyota broke new ground this year by opening 17 outlets to sell only Volkswagen and Audi vehicles, also long sold by Yanase, Japan's biggest distributor of imported cars.

Toyota's new Audi-VW sales have passed 750 a month, and Japanese customers reportedly are waiting as long as four months for delivery. The number of dealerships is expected to double, to 34, by next year.

Their move to Toyota left a gap in Yanase's line that GM plans to fill next year by supplying Opels from its European factories.

Unlike cars made in most of the Big Three's U.S. factories, the Opel could easily be introduced for large-scale sales here because its European production lines regularly turn out models with the steering wheel on the right. GM also plans to provide Yanase with a right-hand-drive model of its hot-selling Saturn, produced in Tennessee.

"Every time we meet with Yanase, they want to know how soon they can have Saturns," Mr. Durrie said.

But that plan, originally scheduled for 1994, might have to be pushed back because of lengthening delays in getting Saturns to U.S. dealers, whose customers can face additional months of waiting after ordering.

"Saturn dealers in the U.S. have made very substantial investments to handle a different kind of car in a different kind of way, and they properly should have first claim on the company's production," Mr. Durrie acknowledged last week.

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