"The lights in U.S. auto plants have been going out all over America — extinguished by high labor costs."-Roger B. Smith, General Motors chairman, October, 1981
"The Japanese voluntary import restriction should be set for five years with a phase-down from 930,000 cars ..."-Ford Motor Company's position request to the International Trade Commission in 1980
"The Japanese voluntary import restriction should be set for five years with a possible phase-down at 1.1 million, plus a 20 percent tariff (up from the current 3%)..."-UAW's position request to the Internatinoal Trade Commission in 1980
What in the world is going on? Maryann Keller of the Paine Webber brokerage house and auto research oracle J. D. Power and Associates both predict that import registrations will rise from the current 27 percent to 35 percent by 1985. National media such as FOR TUNE and U.S. NEWS AND WORLD REPORT have lengthy features asking, "Can Detroit Ever Come Back?" Jack Reilly, head of American Isuzu, says his research shows that hostility appears to be growing against importers in Texas and California, traditional strongholds for high-volume import sales. America's veteran racing favorite, A.J. Foyt, representing the flag, apple pie, and who retains the pioneer spirit, claims that "Detroit is partly responsible for its own problems with the quality of cars they are turning out." Yes, what in the world is going on?
Behind the smokescreen of contrary rhetoric, a pattern is emerging that will dramatically change the "domestic" car buyer's perception of what is good or bad, American or unAmerican. An entirely new set of values is developing in just two short years, which we will see by the 1985 introduction date, or sooner.
For years, fleet buyers have experienced minimum exposure to imports but were acutely aware of domestic manufacturers who offered unique models like Opel from Buick, Chrysler's Champ and Colt and more recently, the Chevy LUV and Ford Courier pickups. These hardly made the "Fleet Buy of the Year" columns. An interim change has become a reality with American Motors now building the Renault R-9 as the Alliance in their Kenosha plant and Nissan (Datsun) nearing completion of their light track plant in Tennessee.
Now comes the revolution! In mid-January, Chevy's chief engineer, Michael Juras, announced that the S-car planning ran into some financial difficulties and was not a "go" project. While GM has sold nearly two million Chevettes they have never gained more than about 15 percent of the subcompact market. In 1985, the Chevette will be 12 years old and was to be superceded by the American S-car. Juras' announcement foreshadowed the May GM news release that they will import 150,000-200,000 Japanese Isuzu subcompacts beginning in 1984. Additionally, GM is expected to announce a similar plan to import a smaller (than the Isuzu ST model - M body - probably a 90-inch wheelbase, under 1600 pounds and powered by a 1.3 liter gas or 1.5 liter diesel engine) front wheel drive car. Also awaiting is the expected announcement of a joint venture between GM and Toyota the build a replacement for Toyota's Tercel in one of GM's currently-idle Southern California plants. All this by 1985 or so.
Chrysler now imports about 110,000 cars a year made by Mitsubishi. In 1984, Ford is planning to import a large volume of smaller subcompacts designed by Toyo Kogyo (Mazda). Ford owns a 25 percent equity interest in Toyo Kogyo, GM now essentially owns over 40 percent interest in Isuzu, and Chrysler has 15 percent of the Mitsubishi parent while Renault now has control of American Motors. GM also has five percent of Suzuki.
What in the world is going on?
What is happening is that although we perceived them as technically resourceful and financially robust, American car makers appear to have decided that they cannot compete domestically for volume sales in the small car markets. Chevy's boss, Bob Stempel, views the 200,000 Isuzu cars as plus-business to increase Chevy's market penetration from 16.7 percent to 20 percent by 1986, under the Chevy name plate.
It may be apple pie, but to some fleet buyers it may taste like sushi.
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