U.S and Japan Car Industries
It is unfortunate that the U.S. chose to use automobiles as its wedge to open the alleged "closed" markets of Japan. One Japan-based managing executive of the
Big Three has even admitted that they consider the Japanese automobile market to be open. Japan is not the island of protectionism in a sea of free trade that its critic allege. The problem for the U.S. auto-makers is not a lack of market access, but a lack of effort. The first step required for the U.S. auto makers to sell competitively in Japan is not to impose of ridiculous tariffs, but to have Detroit bring up the quality to Japanese standards. All in all, the U.S.'s decision to use automobiles as its wedge to open the Japanese market was surely a dangerous one. In addition, the utilization of unilateral actions by the U.S. is clearly a violation of international trade law. Not only is this decision a resemblance of managed trade but a policy which will weaken the leadership position of the U.S. in the world economy as well.
The U.S. needs to do what the Japanese did when they penetrated the American market; hard market research and heavy investment. The Japanese spent billions of dollars studying American taste and manufacturing models that suited them.
The Big Three have generally confined their efforts to sending models that they have made specifically for Americans. Bill Duncan, the head of the Japan
Automobile Manufacturers Assn. states that "it was the basic principals of competition that made the Japanese automobile industry strong."
One example which reflects the short-sightedness of the Big Three is the insufficient number of right-hand models available in Japan. Since cars in Japan are driven on the left side, all domestic makers produce right-hand drives. It's simple, the inconvenience of a left-hand drive, at tolls, parking lots or when overtaking another car is too dangerous. Naturally when the Japanese export their cars to the U.S., in each of the 190 versions sold, they provide American drivers with a steering wheel where they expect it; on the left side1. On the other hand U.S. exports have a grand total of 2 models which feature a right- hand drive. The Big Three sold a measly 22,000 left-hand models in 1994. Jeep sold 11,000 on their Cherokees alone, just because they remodeled it to a right- hand model2.
Another area in which Detroit must seek change is in car size. In Japan, the normal American cars are just too big. 80% of the cars in Japan are under 2000cc
(2L.) Imagine yourself driving on the jammed packed, narrow streets of Tokyo.
In a capitalistic country with a free market, foreign competition is expected. This is no exception for the automobile industry where America competes with its various rivals. Competition from elsewhere encompasses that from Italy, Germany, and of course, the renowned Japan. The Japanese vehicle industry is especially competitive; according to the Automotive News Data Center, five out of the ten best selling vehicles of the year are Japanese vehicles. This data applies to the U.S. market over the first 9 months of the year. Expectedly, the automobile industry is an important and significant market. Motor vehicles are a major form of transportation as many people in the U.S. own at least one car.
BMW having high market share in European and U.S luxury car markets, started facing issues with launch product qualities and also facing a fierce competition from Japanese producers. Currently the market share was still stable but the rigorous growth of Japanese producers would affect BMW in future. These Japanese competitors had set higher standards of conformance.
Over the past 150 years, Canada’s relationships with other nations has led to the development of many trade sanctions. The nations involved in these trade sanctions haven’t always had the greatest relationship, allowing Canada to become the tie between the nations, advancing the development of countless Canadian industries. Due to Canada’s relatively small population, its automotive industry, hasn’t been able to grow as a self-sustained industry, leading the industry’s development to occur solely through economic sanctions. The two dominant forces these automotive sanctions face are the United States and Europe, each having a large stake in the development of the industry.
Currently, the major competitors within the industry are Ford, DaimlerChrylser, General Motors (GM), Honda, Toyota, and Volkswagen. A few United States (US) manufacturers produce 23% of the world’s vehicles while Japan is responsible for 21%. The tendency for the industry is to be a global producer of automobiles; parts can be made throughout the world and assembled in many different places. The trend of consolidation has continued throughout today. Presently, this is evident in the recent acquisition of Chrysler by Daimler-Benz in late 1998, thus forming DaimlerChrylser. These consolidations have proved beneficial to consumers since companies have been able to reduce costs and pass those savings on to the customers. Some of the other major examples of consolidation are Nissan selling off a controlling 37% interest to Renault; General Motor’s 49% ownership of Isuzu; and Ford’s 33% majority of Mazda. Other efforts to become more competitive have translated into the European Union dropping trade barriers and European carmakers employing cost reducing efforts. American manufacturers have seen 2-3% growth over the last few years. Some current trends are the explosion in popularity of the Sport Utility Vehicle (SUV) and big luxury vehicles.
The automotive industry is without a doubt an industry that has massive implications relating to the United States economy as well as affecting every American household. Shifts in the supply and demand of automobiles influence the current and future household purchases. Households must determine what amount of their hard-earned income to allocate to certain necessities. Because most households have a budget, the amount spent on transportation it limited. While most industries have an effect on the economy, the automotive industry has far-reaching implications for most Americans. Not only are the workers affected but the many spin-off jobs created as well as the consumers that must purchase the automobiles manufactured.
No technology has had a greater impact on the American life than the automobile. Where we live, how we work, and how we travel, what our landscape looks like, our environment have all been shaped by the automobile. There isn’t a better place that demonstrates the social, geographic, and political changes brought by the industry than Detroit, the motor city. Detroit was situated to be a center of the American automobile industry. All of the material that was needed to build was easily accessible to the city by the great lakes waterways and by rail. The automobile industry helped people with their everyday lives and changed the way people saw the world.
In the United States, modern car manufacturing has been historically dominated by the American companies including Ford Motor Co., Chrysler Group LLC, and General Motors Co. These three companies, known as the Detroit Three, controlled 95% of the market in the 1950’s and the dominance continued until the beginning of the 21st century. In the 1980’s Japanese auto manufacturers entered the United States, a decade later the Germans, and finally in 2000’s the Koreans. By the end of 2009, the Detroit Three only accounted for 45% of the total U.S. auto market. Another factor that had influence on this was constant fluctuations in gasoline prices and price sensitive consumers. According to the U.S. Department of Energy, gas prices hit record high averaging $3.07 per gallon in May 2007 and kept climbing up to $4.08 in July 2008. As gas prices kept increasing, consumer buying trends have been changing. In 2006 sales for SUVs, pickup trucks, and vans dropped 16%, while the market for compact cars rose by 3%. Unfortunately, the Detroit Three were not prepared for this since their...
Initially to understand the importance of government regulation, and even government debate on certain measures one must look at the disastrous Chevrolet Corvair. By outlining this technologies main problems, it can make the governments involvement much more visible. Back in 1959 the Department of Commerce reported that 51,000 people would die from automobile accidents by 1975, that figure was obtained in 1965. That significant figure was reached 10 years before its projected date, and the question is why? The answer was, unlike many other tr...
As men returned from war, the new and hot item to own was a car. Ford and GM’s Chevy became the biggest automobile manufacturers. In fact, by 1923, Ford Model T’s accounted for just under 52% of automobiles in the market while Ford held over 62% of the market. The production of Ford automobiles had reached nearly 2 million. In 1924, you could buy a Model T for $290 dollars. Nowadays, that is probably a monthly payment. Yet some cars were very expensive, with a Rolls Royce costing 15-17,000. Yet, automobiles were not the rage throughout the world. The automobile was just another sign of American youth, vibrancy, and prosperity. In 1920, US automobile production was nearly 2.3 million. The next largest producer was France, making 400,000 units. The total automobile production was just under 2.4 million. Obviously, Americans were really the only people buying cars.
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Some American made cars are not built with the elegance of the Japanese cars. The engine is likely to be larger and can be quite louder, their vehicles are less reliable and safety consideration is even less. So, with this, they are known to be inferior to Japanese cars. Speaking of which, Japanese cars are known for their sleek look and speed capabilities, they are a popular choice among Americans. When in fact the Japa...
Many Americans prefer foreign built cars over domestic built cars, according to national statistics; in 2015, the number one selling import car in America was the Toyota Camry(caranddriver.com). It is a compact, light car made in Japan. It has a small four or six cylinder motor that is both strong and fuel efficient. The labor in most foreign countries is cheaper also. People tend to be poorer and more willing to work for lower wages and less benefits. These cars are more fuel efficient, lighter, and sometimes safer because of the materials that go into making them. For these reasons many Americans prefer foreign cars over domestic cars because they are cheaper, more fuel efficient, more compact, sometimes faster, and in some cases safer.
Japan was devastated at the end of World War Two. Although the automobile industry wasn’t as heavily hit as some of the other industries, there were some severely hindering effects on production. Steel and other materials were difficult to obtain causing production to drop 50% by the end of the war (Chao, 1997). Now they are the leading automobile manufacturers in the world. Japan is the epitome of car manufacturers.
In the 1970s, the japanese manufactured a cheap and small engine car. This was a threat for other automobile industries from different nations because they were so successful in their manufacturing (Healey 18). The seventies were also different than the other decades before it. It was a decade when earnest protestors buried Chevy to protest the pollution of the internal combustion engine. The Japanese took over america’s import market, the japanese took over 90 percent of the 2.3 million cars that were imported in 1979 (Edelstein, McDonough 122). There was no car that challenged america’s Macho more than the “Castrated” Cadillac seville of 1975. The Cadillac could shed 1,000 pounds and twenty-five inches of length on the seville and the cost was of $12,500 (Edelstein, McDonough 122).
The fast population growth rate of humans means that the necessity for transportation vehicles is also enormously increasing. Studies have shown that in 1999 the worldwide number of vehicles registered was 700 million. From this huge number of vehicles, the US has a large share, which includes 200 million cars and light trucks. The number of cars worldwide also grew three times faster