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  • Print publication year: 2010
  • Online publication date: July 2010

2 - The internationalization of the Japanese automotive industry and local production overseas

Summary

The “new” global imperative for the Japanese automobile industry

The Japanese automobile industry has reached a major strategic turning point. Following the collapse of the bubble economy in 1991, the Japanese domestic automobile market experienced a protracted three-year sales slump and underwent major structural changes. This forced the industry to come up with a new strategic response through restructuring and rationalization. Hard hit by the so-called Heisei recession that followed the collapse of the bubble economy, each of the major Japanese auto makers saw a dramatic worsening of its financial results, to the extent that one wonders what has happened to the competitive strength of the world's most powerful global competitors.

The contrast is striking: during the peak years of the 1980s through to 1991, when the companies' operating results were substantially stronger, the eleven auto manufacturers generated profits in a single year of around ¥1.1 trillion, but within a few years profits had fallen to less than half that, at about ¥500 billion, with three of the eleven firms reporting a loss and several others only borderline profitable.

Until this recession, the Japanese industry had generally experienced nearly constant growth, showing a rising curve of sales, volume, and profits. The only times when the industry experienced a decline in production was in 1973, as a result of the first oil crisis, and again in 1981, as a result of the second oil shock and the imposition of voluntary export restraints to the United States.

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Kenney, M., and Florida, R., Beyond Mass Production: The Japanese System and Its Transfer to the US, Oxford University Press, 1993, p. 104.
Shimokawa, K., “Nissann no genchika senryaku: Sono jittai to kadai,” Jidosha Journal, January, 1991, pp. 8–9
Shimokawa, K., “The internationalization of the Japanese automobile industry,” in Hook, G. D. and Weiner, M. A. (eds.), The Internationalization of Japan, Routledge, 1992, p. 138.