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Remade in Japan

Ford virtually owned the Japanese auto market before it was ordered out in 1939. Today the Big Three--long focused on winning back customers at home--are pushing to establish themselves in Asia. The battle relfects changes on both sides of the Pacific.


TOKYO — Auto dealer Toshio Nakano's idea of a Hawaiian vacation isn't the typical tour of white sandy beaches and lush green golf courses. When he took 20 salesmen to Honolulu earlier this month, he put them in rented Ford cars and gave them a map of the island.

Their assignment: to drive like Americans.

Nakano is making sure the sales staff at his two Ford showrooms in Tokyo knows more than just the fuel economy, engine size and upholstery options for the Ford Mondeo sedan and Taurus station wagon. He wants it to be able to sell Japanese motorists on a lifestyle in which the automobile represents freedom--as embodied by, say, a drive along the beach at Waikiki.

As the first Japanese auto dealer to jump ship and join the Ford Motor Co. team in Japan two years ago, Nakano has spent much of his energy trying to bridge gaps in culture and experience.

And the former Nissan executive remains convinced, even while his dealership loses money month after month, that Japanese consumers can be won over if they are given the right information about price, quality and the "Ford way of life."

"We should know about the American lifestyle," he said.

Dealers like Nakano are a key part of Ford's strategy to win back some of the market it virtually owned before World War II, when it was ordered to shut down its Yokohama plant and leave the country. Back then, Ford sold 75% of the cars in Japan.

Until recently, Ford and other U.S. auto makers were a lot more concerned about winning back customers in the United States than in cracking a country where bureaucratic barriers have held imported autos below 3% of the market for years.

The story of Ford's--and Detroit's--battle to establish itself in Japan illustrates dramatic changes on both sides of the Pacific. Boasting improved products, revitalized U.S. auto makers are shifting their focus to long-overlooked and historically protected markets abroad. And international pressure is forcing the Japanese to face competition--in autos and other products--on their home turf.

Last summer, Detroit got a boost when Japan--under threat from the U.S. government to impose $5.9 billion in sanctions on Japanese luxury car imports--agreed to take steps toward a more open domestic automobile market.

In the months since, the Big Three have stepped up what had been a halfhearted dabbling in the Japanese market. A trickle of right-hand-drive U.S. vehicles became a larger trickle: In February, Ford added a right-hand-drive version of its Taurus, America's top-selling auto. This month, Chrysler Corp. plans to add the spacious Neon small car to its Jeep and other right-hand-drive offerings, and General Motors Corp. has begun shipping right-hand-drive Cavaliers, to be followed next year by Saturn.

At Ford and GM, a key part of the strategy has been to draw on their big German subsidiaries. Ford's Mondeo, a German-built version of its "world car" sold in America as the Contour, quickly became its biggest single seller in Japan, while GM's German-based Opel unit accounts for about 80% of its fast-growing Japanese sales.

Detroit has few illusions about taking Japan by storm, but there is more at stake than that. Carving out a piece of this market should make it easier to compete in other, faster-growing Asian countries where the Japanese already rule the roost. For example, Japanese auto makers control 85% of the market in Thailand, Southeast Asia's fastest-growing market.

"This is a good test for all the auto makers, whether they can succeed in the Japanese market," said Chikao Masuzawa of Solomon Bros. Asia Ltd. in Tokyo.

Japanese auto makers, used to competing in a market with 11 domestic auto firms, don't exactly show signs of panic. They describe the stepped-up foreign competition as business as usual.


Although Ford has historically been the most international-minded of the U.S. Big Three, it has been cautious recently in such wide-open areas as Asia and Eastern Europe.

Ford is belatedly expanding into other parts of Asia, establishing a joint-venture pickup truck factory with Mazda in Thailand (where it lags Chrysler in local production) and investing in Jiangling Motors Corp. in China (where GM and Chrysler are much better established).

Although Ford trails GM and several German auto makers in Japan, its low-ball prices, its control of Mazda and its nuts-and-bolts attention to building a dealer network have marked it as the most aggressive auto maker about the Japanese market--and perhaps the best positioned for the long haul.

"Ford is getting really serious about this market. I haven't seen the same spirit at GM or Chrysler," said Koji Endo, an auto analyst with Lehman Bros. Japan Inc.

Ford's pioneering days in Japan date to the early 1900s, when an entrepreneurial Japanese businessman persuaded a pharmaceutical company to begin importing Ford cars. After the devastating Kanto earthquake in 1923, the Japanese government used Ford vehicles for public transportation. The company began building Fords in Yokahama.

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