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What Now for Imports? : Foreign Car Makers Gear Up for Markets of '90s : JOHN E. REILLY: Questions & Answers

December 24, 1990|John O'Dell | Times staff writer

As the U.S. auto industry continues its battle against imports, John E. Reilly finds himself in what some would find an uncomfortable situation.

The 64-year-old San Clemente resident, native Pennsylvanian and graduate of the Buick division of General Motors, is chairman of Japanese-owned American Isuzu Motor Inc. and chairman of the Assn. of the Import Automobile Manufacturers.

As such, he is chief lobbyist in Congress for improved treatment of the car companies Detroit loves to hate.

He also is the only non-Japanese chairman of a U.S.-based Japanese auto importer, a situation, he says, that speaks as much for Isuzu as for John Reilly.

Although steeped in the world of American car making, Reilly says it was easy to move from Buick to imported cars--first with Volkswagen of America in 1965, then as head of VW's Porsche/Audi division in the United States and executive vice president of two regional Toyota distribution operations before joining Isuzu in 1980.

The reason? In the 1960s, management in Detroit was so ossified that the real opportunities for advancement and creativity lay outside the so-called Big Three and with the upstart importers, Reilly said.

But things have changed--in Detroit and in Japan--and Reilly examined the changes, and the challenges facing auto importers in the coming decade, during a recent interview with Times staff writer John O'Dell.

Q. Imports currently have about 30% of the U.S. auto market. Do you see import automobiles taking a substantially bigger share?

A. No, I don't think so. If we can assume that the Big Three have recognized what the competition is and what they need to do to compete on a level playing field, then I believe in the power of American productivity. Give us a major conflagration some place and the American always says, 'Yeah, we can produce.' I think the auto magnates of Detroit have said 'OK, we recognize the crisis and now we know how to overcome it.' I really think they've reached that point, and therefore I don't see the import business going beyond what it has right now.

Q. What does that mean for some of the smaller importers? Everyone knows what a Honda is, or a Toyota or Nissan. But when you get down to an Isuzu--although Joe Isuzu did a lot for the company--and Suzuki or Daihatsu, what happens? Are we going to see some thinning out of the importers?

A. I think first of all what you're going to see is that the Toyotas, the Nissans and the Hondas--companies that have already established themselves as really full line marketers--will continue to be here, continue to be successful, continue to compete with Detroit. But the smaller manufacturers have got to do one of two things: either expand their present product line and go fight the big boys, or continue to identify and occupy market niches. It's just unthinkable that when we started with our Isuzu Trooper, for example, it led the sports utility vehicle category for the first five years, outselling Toyota, Nissan and every other company out there. It was a successful niche that Isuzu found and exploited.

Q. What happens if you can't find any more niches and you can't expand?

A. Then I think you'll probably see some mergers by the turn of the century, and I have no idea who'll merge with who.

Q. Speaking of niches. The really small cars, like those made by Daihatsu and Suzuki, get really great gas mileage. So why haven't they taken off in the face of rising gas prices?

A. First of all, it's very soon after the gas tax was increased and the Mideast crisis started, too soon to see any resulting change in car-buying habits. But I think what you're going to see is that the consumer will continue to buy the vehicle of his choice, be it a large car or small car. What he'll do is drive less. He'll reconsider that Friday afternoon trip up to Santa Barbara to have dinner, or the hour and 20-minute commute. So I think that's what you're going to see. Not a major change in car sales but people driving less.

Q. Do you feel that import auto makers have been fairly successful in their relationship with Congress over the years. And what's the biggest concern facing importers going into 1991?

A. Yes, we've been fairly successful. And rather than specific issues, the biggest concern our association has is that the government stop piling on legislation and requirements until we get finished with a few things they've asked us to do in the past. It makes no sense for Congress to tell us to make our cars more fuel-efficient and then to say make them more crash-resistant. Once they say we've got to add more fuel efficiency, then they should give us an opportunity to try that, rather than say after we've been been working on fuel efficiency for two weeks that we should now increase the weight of the vehicle. You just can't do both of those things unless you come up with a whole new system of propulsion, or a new metal which is lighter than anything ever known to man. Give us an opportunity to do one thing first.

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