| BUSINESSWEEK ONLINE : MARCH 1, 1999 ISSUE | ||||||||
| ||||||||
 | ||||||||
| INTERNATIONAL -- ASIAN BUSINESS
Commentary: Wanted: Foreign Brides for Japan's Carmakers (int'l edition) Impossible. That's how Japan's auto industry reacted just a year ago to any suggestion of new partnering with foreign carmakers. Sure, Japan's banks may go bust. Its Prime Ministers may fall. And megamergers like DaimlerChrysler may rewrite the rules of the road. But surely Japan's most competitive manufacturers, its auto makers, would always race ahead--on their own. But now, two of Japan's largest auto makers, debt-plagued Nissan Motor Co. and Mitsubishi Motors Corp., are effectively in play. And instead of falling into the arms of their domestic rivals, they are primarily interested in foreign partners. Nissan Motor President Yoshikazu Hanawa says he's willing to hand over 33.4% of Japan's No. 2 auto maker to a foreign competitor: DaimlerChrysler may take him up on it. Mitsubishi Motors President Katsuhiko Kawasoe denies Mitsubishi is interested in any foreign carmaker taking a stake, but he does want to develop ''business relationships [with foreign auto makers] that produce win-win benefits.'' Kawasoe's comments have provoked a flurry of speculation on who may take an interest in Mitsubishi: Ford's and General Motors' names have been mentioned. NOTORIOUS. There's still a long way to go before such deals materialize. And Mitsubishi Motors is in such desperate straits that potential partners may shy away. But just the news that such partnerships are being considered signals that this is a defining moment for Japan's auto makers. If European and American carmakers forge major relationships with Nissan and Mitsubishi, foreigners might soon have an influence over almost half of Japan's notoriously closed auto market. That state of affairs would have major repercussions on the global industry. For years, Japan's car guys have acknowledged their local market was too small for 11 manufacturers. They expected their problems to be solved through arranged marriages with Japanese neighbors. Yet with Japan suffering through its worst recession since World War II, all potential Japanese suitors are struggling with excess capacity. So Japan's carmakers would prefer to see competitors go belly-up. But to foreigners, even a stake in a problem-plagued Japanese carmaker is still a beachhead in the world's third-largest auto market. If DaimlerChrysler takes a stake in Nissan Motor and Nissan Diesel, more than a third of Japan's vehicle market will be partly foreign-owned, including Ford's hold on Mazda Motor Corp. and General Motors' stakes in truckmaker Isuzu Motors Ltd. and minicar maker Suzuki Motor. Divvying up Mitsubishi Motors is less likely. But if such a scenario materializes, the share of carmakers in Japan influenced by gaijin may reach as high as 42%. With foreigners suddenly prominent on the Japanese scene, Detroit would lose the moral high ground in its complaints about unfavorable competition with Japan. Detroit's big beef has been its inability to crack the Japanese market because of restrictions and hidden barriers. But if Nissan and Mitsubishi had major foreign involvement, that argument would lose its punch. Foreign involvement may also give Japanese auto makers the excuse they need to restructure: It's easier to shift the blame to the gaijin partners when it comes to making tough decisions. And foreigners might force the Japanese to rethink their strategies. When Ford assumed management of Mazda, for example, it shifted the focus to profitability, not sales at any cost. Thus Mazda has not recovered its lost domestic market share, but it has seen a surprising jump in profits despite tough market conditions. The gaijin, of course, may find it as tough to turn a profit in Japan as their new partners have. Some Chrysler executives compare investing in debt-plagued Nissan to tossing gold coins into the Pacific. And if the foreigners find it hard to duke it out with Honda Motor Co. and Toyota Motor Corp. overseas, imagine the challenge of taking on these two in their home markets. But the lure of the Japanese market is great. Japan's flagship industry is headed for an era of enormous change. By Emily Thornton _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
|  |
 | |
INTERACT E-Mail to Business Week Online | |||
