Japan to reduce car quota Reductions in exports to U.S. announced

March 19, 1992|By Leslie Helm | Leslie Helm,Los Angeles Times

TOKYO -- In what officials hope will forestall protectionist legislation in the United States and shore up uneasy U.S.-Japan relations, Japan's Ministry of International Trade and Industry announced today that it would cut its self-imposed quota on auto exports to the United States to 1.65 million in fiscal 1992, down from the current level of 2.3 million.

Since Japan's actual exports to the United States will reach about 1.73 million cars in the year that ends March 31, the decision will mean a 5 percent cut.

"We made the decision in view of the importance of coexistence and co-prosperity between Japan and America," said Trade Minister Kozo Watanabe.

He said he hoped that the decision recognized the importance of the auto industry to the United States and that it would help support free trade.

While some analysts expressed concern over the growing trend toward "managed trade," many executives seemed resigned to the need for government intervention in relations between Japan and the United States.

"While there is concern that the government's decision may lead to a strengthening of managed trade," Nissan Motor Co. President Yataka Kume said of the decision, "I believe it is based on a comprehensive assessment of the present state of strained relations between Japan and the U.S."

Trade in autos and auto parts accounted for two-thirds of the United States' $40 billion-plus trade deficit with Japan and became the focus of President Bush's visit to Japan earlier this year.

Hitoshi Nishiyama, an analyst at Nomura Research Institute, said a small increase in production at Japanese auto makers' U.S. plants would offset the reduced exports.

Japan's share of the U.S. auto market has increased steadily in recent years, rising to 30.6 percent last year from 23.9 percent in 1988.

Christopher Cedergren, an auto industry consultant with AutoPacific in Santa Ana, Calif., said the quota would slow what had been the dramatic market share growth enjoyed by Japanese auto firms in the United States.

Mr. Cedergren said Japanese auto firms now "will be a little less driven by market share and will focus more on profitability." The result, he said, is that consumers are likely to see fewer rebates, though sticker price increases should not outpace those of domestic manufacturers.

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