What Japan Did To Detroit

You have to give Toyota Motor Corp. (TM ) credit for an heroic attempt at denying the obvious. Japan's largest auto maker in late December announced plans to produce more than 9 million vehicles in 2006, which most analysts figure means it could surpass General Motors Corp. (GM ) as the world's largest auto company. Since then, a few frenzied cries have arisen about Japan's looming dominance of the U.S. auto market, and Toyota shifted its rhetoric into reverse. On Jan.17, James E. Press, president of Toyota Motor Sales U.S.A. Inc., stated contritely that Toyota has no desire to overtake GM as world sales leader, going so far as to laud ailing GM as "a global icon" that will emerge from its troubles even stronger.

If this all sounds familiar, you're right. In the 1980s, America was up in arms over the success of Japanese manufacturers threatening U.S. auto jobs. Politicians railed. Union members rallied. And more than a few Toyota Corollas and Datsun B210s were trashed by angry protesters. But that crusade, however well-intentioned, was always doomed to failure because it attempted to put the primacy of national borders above the wisdom of the marketplace.

Of course, most Americans wanted auto jobs to stay at home, but not if the cost of such national loyalty was settling for more expensive, less reliable cars. Lulled by years of competing in a relatively captive market, American auto makers initially misunderstood that fact. Today it's Manufacturing 101.

The simple truth is that both the U.S. consumer and Detroit auto makers have benefited mightily from the Asian competition of the past quarter-century. Consumers got higher quality, smarter styling, better fuel economy, and a lot more value for their car-buying dollar. Detroit, for its part, was forced to face up to its out-of-control costs and lagging quality. True, Japanese nameplates like Toyota and Honda (HMC ) now control about 30% of the U.S. car market. But the stiff competition and resulting focus on the customer have also left American carmakers better equipped to compete in the future. Toyota's Press and other executives at Asian car companies may be loath to say that publicly, but we aren't. However painful, it's an important lesson for Detroit -- and for America.

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