Issue: Doing Business With Japan

Short Article: Lessons From the Road

By: Scott Sowers

Pub. Date: October 12, 2015

Access Date: March 5, 2019
DOI: 10.1177/2374556815613994
Source URL: http://businessresearcher.sagepub.com/sbr-1645-97172-2697498/20151012/short-article-lessons-from-the-road
©2019 SAGE Publishing, Inc. All Rights Reserved.
 ©2019 SAGE Publishing, Inc. All Rights Reserved.

Rise of Japan's auto industry traces to 1930s

Executive Summary
The emergence of Japan's auto industry was a long time coming. The seeds of its dominance were planted in the aftermath of World War
II as it overcame not only damage from the fighting but also the earlier supremacy of American manufacturers. Its growth illustrates how
Japan became a manufacturing power.

Full Article
U.S. automakers once dominated Japan: Before World War II, Ford sold 75 percent of the cars on Japanese roads. 1 But that's ancient
history. For decades, the Japanese auto industry has been a global titan, perhaps the business that best illustrates how an economic
power arose from the rubble of the war. From humble beginnings, Japanese automakers established a foothold in the United States, the
world's largest car market, and never stopped moving forward.

Workers install the engine block in a 1982 Honda Accord as production starts at the carmaker's plant in Marysville, Ohio.
(Honda)

In the buildup to World War II, as Japan became more hostile to foreign influence, its 1936 Automobile Manufacturing Industry law required
companies to have an official license from the government to build cars there. Only two licenses were initially granted, one for Toyota and
one for Nissan. 2 By 1939, the Japanese had kicked out Ford and General Motors and closed their plants. 3
During the war, the Japanese car builders and other large manufacturing firms produced only war matériel. Mitsubishi, which started in
1870 as a steamship carrier, built nearly 4,000 Zeros, the planes used to bomb Pearl Harbor in 1941. Nakajima Aircraft produced more
than 6,000 Zeros, but after the war, it morphed into Fuji Heavy Industries, which now makes Subarus. 4
During the Allied occupation, Japanese manufacturers switched to producing cars and trucks for consumers. The occupying forces
required them to submit applications outlining what they intended to build and also to agree to dissolve the business arrangements known
as zaibatsu, imperial-era conglomerates that were the predecessors to the modern networks of interlocking business relationships called
keiretsu.
The occupying forces were suspicious of the zaibatsu and attempted to dismantle them. 5 Toyota was targeted; the company complied by
splitting itself and shedding some plants. 6 Japan's major automakers would eventually all become charter members of the same
keiretsu. 7
The Japanese companies specialized in producing small, inexpensive cars. These became more popular globally, including in the United
States, when the oil embargos of the 1970s sent gasoline prices soaring. In 1982, Honda moved beyond exporting cars to the United
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Short Article: Lessons From the Road
SAGE Business Researcher
 ©2019 SAGE Publishing, Inc. All Rights Reserved.

States, building an automotive plant in Marysville, Ohio, to crank out the Accord, its popular sedan, a move that put the factory closer to the
sales market. 8
Honda broke a lot of industry practices by moving auto painting, welding and assembly under one roof and bypassing the powerful United
Autoworkers Union to hire locals with no experience in building cars, a move skeptics questioned. 9
More skepticism arose when the Japanese pioneered the use of robots in auto plants. But this gamble also paid off: Figures from the past
few years indicate that Japan is the second-largest market for robot sales and has the highest number of industrial robots in operation,
more than 300,000. 10 Other car manufacturers followed Japan's lead, automating their assembly lines. In 2012, auto industry sources
estimated that 78,000 robot units were sold to car builders, worth an estimated $15 billion, with an estimated 60 percent of those coming
from Japanese firms, including Fanuc, Yaskawa Electric and Nachi-Fujikoshi. 11
Innovations in car manufacturing eventually led to new forms of car propulsion. Toyota helped pave the way for a mass-produced electric
hybrid vehicle with the Prius, unveiled in 1997 and selling worldwide in 2000. As of September 2014, cumulative sales exceeded 7 million
units. 12 (The brightest days of the world's bestselling hybrid may be coming to an end, as recent figures indicate Prius sales fell by 11.5
percent in 2014.) 13
The Japanese have also pioneered all-electric vehicles, the Nissan Leaf and Mitsubishi i-MiEV.
And Toyota has taken a step toward bringing the first hydrogen fuel cell car to market, the Mirai. “Automaking has been the backbone of
the Japanese economy for the last 30 years,” says Masato Otaka, spokesman for the Embassy of Japan in Washington. “But the car
factories are actually moving out of the country, and two-thirds of the cars sold by Japan are now made in the U.S. because it's closer to
the market. We are making less and less cars in Japan, which is why we have to diversify.”

About the Author

Scott Sowers is a freelance writer and independent film producer based in Washington, D.C. He writes and creates content about
architecture, design, real estate, energy, technology, travel and the automotive industry. His work has appeared in The Washington Post,
The New York Times, Home & Design and Hemispheres Magazine. His first novel, “Life and Death at the Dog Park,” is available through
Big Gorilla Press. In 2014, he accepted an invitation from the Foreign Press Center/Japan to travel through post-Fukushima Japan.

Notes
[1] Evelyn Iritani, “Remade in Japan,” June 2, 1996, Los Angeles Times, http://tinyurl.com/pnw3dkl.
[2] Chalmers Johnson, “MITI and the Japanese Miracle: The Growth of Industrial Policy: 1925–1975,” 1982, p. 132.
[3] Iritani, op. cit.
[4] “Mitsubishi A6M Reisen,” The Aviation History Online Museum, updated March 25, 2014, http://tinyurl.com/yaldjtc.
[5] Kenneth Pyle, “The Making of Modern Japan,” 1995, p. 248.
[6] “Converting to Meet Civilian Demand and Dealing with Post-war Reforms,” 75 Years of Toyota, undated, accessed July 3, 2015,
http://tinyurl.com/d7l85kl.
[7] “The Keiretsu of Japan,” San Jose State University, undated, accessed Oct. 5, 2015, http://tinyurl.com/oce9y3a.
[8] Benjamin Reeves, “Drive From The Rising Sun, Why Japan's Car Companies Are Moving Manufacturing Overseas,” International
Business Times, May 19, 2012, http://tinyurl.com/odnqzyw.
[9] Ralph Kisiel, “Gamble in rural Ohio pays off big,” Automotive News, June 8, 2009, http://tinyurl.com/pf9rwaj.
[10] “Global robotics industry: Record beats Record!” news release, International Federation of Robotics, June 4, 2014,
http://tinyurl.com/nkttcf9.
[11] Roger Schreffler, “Auto Industry Leading Market for Japanese Robotics,” Aug. 21, 2013, WardsAuto, http://tinyurl.com/p85mvew.
[12] “Toyota is Global Hybrid Leader with Sales of 7 Million,” news release, Toyota, Oct. 13, 2014, http://tinyurl.com/odz38fo.
[13] Brad Tuttle, “Why This Might Be the Beginning of the End for the Toyota Prius,” Money, Jan. 6, 2015, http://tinyurl.com/qz7j94m.

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