Japanese Auto Manufacturing

The Road to Japanese Automobile Manufacturing Dominance

Japan was devastated at the end of World War Two. Although the automobile industry wasn’t as heavily hit as some of the other industries, there were some severely hindering effects on production. Steel and other materials were difficult to obtain causing production to drop 50% by the end of the war (Chao, 1997). Now they are the leading automobile manufacturers in the world. Japan is the epitome of car manufacturers.

Japan had a big ditch to dig themselves out of. First of all to enter into any kind of production they had to get permission from the General Headquarters of the Allied Powers of G.H.Q. This entity regulated trade of the Japanese until 1955.

They allowed for as many as thirty manufacturers to enter the production of trucks in 1945, and in 1947 as the ambitions of the industry increased they allowed manufacture of small passenger cars (although limited to only 300 cars per year). With such small potential for production there was mass unemployment and the manufacturers had to take on the repair of their own damaged vehicles.

Consequently, in 1949 with the tight government finance and banking policies adopted (to suppress inflation) Japan was hit with a massive recession. It was a real blow to the automobile industry; manufacturers had to cut wages and layoff workers. From 1949 to 1950 employment in the automobile industry was slashed by 23% (6,200 people). The labor unions confronted the management of the car makers, and all the manufacturers were hit with the longest strikes in Japanese history.

Japan struggled through the early 1950’s, and in 1955 the “Post-War Era” officially ended. With the G.H.Q. out of the picture the Ministry of Transportation announced the People’s Car Plan, which gave Japanese auto manufacturers an excellent opportunity to develop new original cars of their own. The plan was eventually be scrapped because the manufacturers thought that proposal’s requirements would be “impossible to manufacture with the performance and sales price requested” (Shimokawa, 1994). The People’s Car Plan did influence competition to market new products and it gave primarily three-wheeled vehicle makers a way to enter the four-wheel market. Suzuki, Fuji (Subaru), Mitsubishi, and Toyo Kogyo (Mazda) all entered small cars into the market almost immediately.

Moreover, the first two small cars that really made a name for themselves were the Toyota Corona and the Nissan Bluebird. Of course 90% of these cars were used for business (Rinehart, 1997).