New chief hopes to make inroads with sales of parts

GM JAPAN EYES TOUGH MARKET

October 25, 1992|By John E. Woodruff | John E. Woodruff,Tokyo Bureau

TOKYO — HELP WANTED: Senior Executive,In worst economy since World War II, sell American cars to Japanese consumers who think they slurp gasoline, break down constantly and are too big for narrow streets. Sell American components to carmakers who have locked-in deals with Japanese suppliers and say U.S. parts don't work. P.S.: No showrooms or service facilities. Tokyo -- Michael Durrie didn't have to apply for that daunting job. It was waiting when he was transferred in July to take over as president of General Motors Japan Inc.

"It's tough," Mr. Durrie, 55, says of his task.

"We come to it with a legacy of 35 or 40 years of being excluded from this market, and that puts us at a disadvantage. If General Motors had been able to do as we did in Europe ever since the 1950s, and come in here and freely sell cars and parts and build factories, we would have a very strong presence in the Japanese market today, just as we have in Europe."

The company Mr. Durrie commands from the sixth floor of a nondescript downtown Tokyo office building has long been one of the most neglected backwaters of General Motors' global empire.

But Mr. Durrie, a 32-year company veteran in his fifth foreign assignment for GM but his first in Asia, inherits a crucial advantage. In recent years, GM has laid the groundwork for a comprehensive business strategy -- the company's first intense effort since American car companies were kicked out of Japan preceding World War II.

The centerpiece of that strategy is not high-visibility car exports. It is the less glamorous -- but potentially more profitable -- supply of parts and components to Japanese car makers.

That seemed an impenetrable market a few years ago, but years of relentless pressure from Washington have opened the door a bit.

When General Motors began to think seriously about Japan, which Mr. Durrie puts at "perhaps about four years ago," it decided to put its biggest early investment into the parts market.

That investment, a $13 million technical center staffed by about 100 young Japanese engineers, came on line this year. Its goal: ** to make GM part of the planning and design process of Japanese carmakers.

U.S. trade negotiators have long cited the Japanese carmakers' close relationships with parts suppliers as one of the major barriers to imports. Mr. Durrie says the technical center can turn that barrier into a GM advantage.

"We've sent a team of about 50 engineers from the technical center to each of the Big Five Japanese makers . . . and the response has been very positive," he says. "Toyota in particular seems very committed to increasing the share of components they buy from foreign suppliers."

General Motors, whose parts subsidiaries are among the world's biggest producers, sold only $6 million in parts and components in Japan as recently as eight years ago.

Aided by continuing U.S. government pressure, Mr. Durrie expects the total to reach $260 million this year, up from $190 million in 1991. That's a 37 percent increase -- in a year when Japan's Big Five carmakers have suffered a 7.3 percent drop in )) first-half sales.

Most of the orders sparked by the technical center's design capabilities, he said, will generate work at GM's U.S. factories. "This is such an expensive place to manufacture that even the Japanese companies are moving a lot of their work offshore."

Despite GM's progress in selling parts, cars remain a hard sell.

Japan's imported auto sales statistics for the first half of fiscal 1992 (April 1-Sept. 30) show growth only in cars imported from the United States.

The figures show that 20,873 cars were imported from America during the six months, a handsome increase of 15.8 percent. Meanwhile, sales for every maker in Japan and imports from every other country were down.

But most of the U.S. imports -- and the lion's share of the increase -- were cars made in the stateside plants of Japanese companies, especially Honda and Toyota.

Despite much ado about President Bush's trip to Tokyo last January, GM and Toyota have made no progress toward realizing Toyota's offer to sell 5,000 additional GM cars here by 1994.

GM had set a bold goal of increasing sales by 16.5 percent this calendar year, to about 12,000 vehicles in Japan. But GM Japan figures show January-September sales have fallen off instead, from 7,146 a year ago to 7,041 this year. There's not much hope that the last three months, even with another ad campaign scheduled for this fall, will be strong enough to reach the goal.

Not that Mr. Durrie hasn't tried. This summer, he escorted writers from the major Japanese auto magazines to a resort in the Western United States, where they test-drove GM's hottest cars. That trip produced rave reviews for the Cadillac Seville.

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