Saturated market, European competition blamed for slump in Japanese car sales

October 06, 1991|By John E. Woodruff | John E. Woodruff,Tokyo Bureau of The Sun

TOKYO -- It's tough here, too.

The home market of the country that has dominated the global auto industry is mired in one of its worst slumps, with sales down 2.1 percent this year.

Although Japanese carmakers almost never resort to significant price cuts or rebates, there is practically no limit to what Japanese salesmen will do to win and keep a customer.

This year, they're trying to increase sales by pushing a four-poster contraption that allows one car to be parked on top of another.

Prices range from $1,200 to nearly $6,000, depending on the sizes of the two cars and the sophistication of the rack's access system, which can be as simple as two removable tire ramps or as fancy as a hydraulic lift.

Even at those prices, stacking autos are a bargain compared with finding another parking space in metropolitan Tokyo, where a one-car space goes for $210 to $730 a month, depending on how close it is to downtown or to a subway station.

Like their U.S. counterparts, Japanese salesmen spend their idle time in the showroom calling likely prospects -- and offering to bring the newest model to their homes or offices, along with brochures on other models and the latest financing deals.

The typical Japanese buyer keeps a car for 10 years or more, so some big dealers here pamper their customers by following every tune-up and repair job with a home visit by a "car-life adviser."

The adviser double-checks the work and suggests how to treat the car between scheduled servicings. He also is trained to pick up monthly payments.

Automakers say the slump results from saturation of their main ++ urban markets, an economic slowdown and increased competition from makers of European luxury cars. The Bank of Japan, the nation's central bank, has imposed high interest rates for nearly two years in a drive to prick the easy-money "bubble economy" of the late 1980s.

Japanese automakers set domestic sales records annually in those years of abundance. From November 1986 to October 1990, the number of cars registered leapt from 50 million to 60 million, or about one for every two Japanese.

But through August, car sales here had declined in every month but one this year compared with the same month of 1990. In August, 344,740 cars were sold, a 3.2 percent drop.

Amid those pressures, Japan's formidable automakers are reporting big declines in their profits.

Toyota, the biggest Japanese automaker, had resisted the slump. But this month, it announced that its pretax profits plunged 22 percent in the fiscal year that ended in June.

Profitability indicators are now down for virtually all of the 51 companies that make cars and car parts here.

"It's the first time in years that all of the big three world automotive markets -- the U.S., Europe and Japan -- have been down at the same time," said Misoji Kawabata, a Tokyo Nissan agent. "The companies are not used to a time when one market wouldn't pick up the slack from the others."

Hardest hit have been the small cars that are the Japanese manufacturers' bread-and-butter models in their home market.

Only sales of Jeep-like four-wheel-drive models -- called off-road vehicles in the United States and recreational vehicles here -- have kept growing.

More than 480,000 of them were bought in the past 12 months -- mostly by youthful buyers -- and sales have increased more than 250 percent over the past four years.

Buyers often keep the vehicles for weekend use at their parents' suburban homes or at vacation-oriented second homes, where parking is no problem.

Manufacturers and dealers are waiting to see whether sales rebound after new models are introduced at the Tokyo Auto Show this month.

"We're pushing hard and hoping hard, but I think the problem is not the cars -- it's the economy," Mr. Kawabata said. "And Japanese drive their cars fewer miles and keep them longer than Americans or even Europeans.

"Now that almost every family has one or two cars, it's harder to find new buyers. Even in good times, we figure on repeat sales every nine to 11 years, not every two to five like in the U.S."

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