America's No.1 Car Exporter Is...Japan?
A delegation of Chinese officials came to America last year in search of automobiles they could buy to help reduce China's growing trade surplus with the U.S. Whom did they approach? Naturally, they went to Honda Motor Co. and Toyota Motor Corp., America's top two car exporters. "They wanted cars from our Ohio plant," recalls Yo Masuda, Honda's vice-president for exports from the U.S. Honda couldn't deliver, but Toyota was happy to oblige and just began shipping Avalon sedans to China from its Kentucky factory.
While Detroit focuses on winning the battle against Japan on U.S. soil, it's losing on the high seas. For the first time, the Japanese surpassed Detroit in North American car exports last year by shipping 167,000 cars from U.S. and Canadian plants while the Big Three exported 162,553. Detroit jumps way ahead, with 316,000 vehicles, when trucks, minivans, and sport utilities are counted, but Japan wasn't making those for export. Now, as more Japanese trucks and minivans roll out, many will be exported. "We expect exports from North America to increase steadily," promises Toyota President Hiroshi Okuda.
A potent combination of high costs in Japan and political expediency in the U.S. is pushing Japan's North American "transplants" into the exporting game. Honda, America's No.1 car exporter, devotes 20% of its North American production to exports. Toyota, in four years, plans to more than double its American exports. That means it will be shipping more vehicles from U.S. ports than it receives from Japan, says Doug West, Toyota's U.S. group vice-president for export and logistics.
FULL SHELVES. Right now, more than half of Japan's North American exports return to the Japanese market. Will those exports ease trade frictions? Probably not anytime soon. So far, they're making only a small dent in America's $60 billion-plus trade deficit with Japan. And the shipments don't resolve the larger problem: U.S. auto makers continue to feel shunned by Japanese auto dealers. "We did not get into a trade negotiation [with Japan] to make sure the Japanese market would be open to Toyota and Honda," says Marjory E. Searing, deputy assistant secretary for Japan at the U.S. Commerce Dept.
Indeed, the Big Three managed to export a paltry 13,675 cars to Japan last year, although they had better luck with trucks, shipping out 23,450. Despite the trade agreement reached in June, U.S. executives charge that Japanese dealers still close their doors to Detroit. "This is all about shelf space, and we don't have good shelf space in Japan," says Andrew Card, president of the American Automobile Manufacturers Assn., the Big Three's Washington lobbying arm.
CRACKING KOREA. The Japanese argue their U.S. exports are just as important in resolving the trade imbalance as whatever Detroit can muster. But the Japanese fear their contribution won't count for much on Mar. 15, when Washington takes stock of how American companies are faring in Japan. "The Clinton Administration isn't focusing on the big picture. They're only looking at Detroit," said Philip Hutchinson, the Japanese auto makers' chief lobbyist in Washington.
Other countries on the receiving end of Japan's exports from the U.S. also aren't overly pleased. Ships loaded with U.S.-made Toyotas, Hondas, Nissans, Mazdas, Mitsubishis, Subarus, and Isuzus are arriving in Taiwan, a market that bars vehicles made in Japan for political and economic reasons. Another target is South Korea, which also is closed to vehicles assembled in Japan. Toyota, in particular, is launching a push into that market with its U.S.-made Avalons. Detroit is trying to crack the protected Korean market, too, but the transplants have an edge. "The kinds of cars Korea and Taiwan like are the ones that the Japanese make in the U.S.," says Linda Y.C. Lim, an Asian trade expert at the University of Michigan business school.
The Japanese reputation for knowing how to adapt their products for all markets sometimes leads to unusual requests from unusual markets. A Toyota distributor in Iceland just sent a letter to West to put in an early order for the T100 pickup trucks Toyota will begin building in Indiana in 1998. "It might not be a high-sales market," West says, "but I'm going to do everything I can to make sure he gets some trucks." It's that kind of thinking that is making the Japanese such formidable America-based exporters.