‘Only 8 car-makers will survive’

Press, 9 October 1980, Page 25

‘Only 8 car-makers will survive’

MARK MURRAY

By

in TOKYO

The Japanese are forging alliances and battle plans for an international car war that could leave only eight surviving manufacturers by the end of the decade. One of Japan’s biggest fears — fighting a twofront campaign — receded with the announcement that Toyota and Ford, the world’s No. 2 and-No. 4 respectively, are negotiating for joint, production of small cars. Along with the continuous crossing of swords with Europe, the Japanese are deeply concerned over mounting pressure on President Carter to restrict imports of their cars, now holding 22 per cent of the American market.

The Ford-Toyota tie-up — nothing is on paper yet —is part of the race to decide who will be the first to .capture a huge world market by using the emerging new technology. Mr Takashi i Ishihara, president of Nissan (Datsun) says: "Our strategy will be to produce even more fuel-efficient, small, low-price, high-quality automobiles — trouble-free cars that will require infrequent maintenance.”

Another Japanese executive says: “The only way to meet the challenge is to go multi-national,' producing cars overseas either alone or an co-operation with a domestic manufacturer.”

Toyota’s production arrangement with Ford fits neatly into this trend. It will give the Japanese a much firmer (but less contentious) foothold in the world’s biggest car market. and will enable both companies to meet the whit e-hot competition from the world’s top manufacturer, General Motors, by pouring billions into research and development. The benefits for Japan are even wider, because Ford will bring into the deal its ' long-standing Japanese marketing partner, Toyo Kogyo, the Hiroshima-based manufacturer of the rotary-engine

Mazda car, among others. Ford has already signed a deal with Toyo Kogyo to co-build a new small car which will be seen here next year. A Toyota executive, Mr Harayuki Kawamoto, says: “There are predictions that by 1990 there will only be eight major manufacturers surviving because of the massive amounts of investment capital needed in the 1980 s to cope with the technological revolution.

“It is argued that only companies with scale merit, producing two to three million cars a year (both Toyota and Datsun qualify, with over three million cars each last year) have any chance of meeting that criterion. “I think that’s a bit drastic, but there is no doubt that competition has become extremely severe and even Toyota could be in trouble if it relaxed for a moment.”