The Europeans are continuing to keep the Japanese off balance on car sales. On Apr. 23, the European Community extracted a promise from Japan to limit exports to Europe to just under 1.2 million cars--a 5.9% drop from 1991. The excuse: projections that new-car sales in Europe will drop 1.3%, to 13.7 million this year. Although Japan had only 11.3% of the EC market last year, it has agreed to absorb almost half of the total European decline. The deal will hurt such smaller makers as Mazda Motor Corp. and Fuji Heavy Industries Ltd., which aren't yet producing from transplants. By going along with the cuts, the Japanese are trying to protect their transplants, which the EC limits don't affect yet. Their production is expected to rise 5% above 1991's 310,000 units. But Japanese executives worry that the transplants also may come under pressure. Such fears could cause them to restrain production and new investment.

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