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Why The Truck Left Japan Behind


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WHY THE TRUCK LEFT JAPAN BEHIND

Honda Motor Co.'s first-ever minivan, the 1995 Odyssey, has some nifty features, including four swing-out doors on the sides--just like a car--and a rear seat that folds down flat into the floor. But it also has only a 140-horsepower, four-cylinder engine, barely adequate for a people-hauler, and will cost a steep $28,000 when it goes on sale in early January.

It looks like another wrong turn by the Japanese in the U.S. truck market. Although Japanese carmakers have shown a phenomenal ability over the past 20 years to understand what Americans want in a car, when it comes to trucks, they just don't get it. Set aside the successful remake of smallish Isuzu Motors Ltd. into a truck-only company in the U.S., and what's left? The Japanese have yet to launch a high-volume, competitive minivan. Japan's small pickups have been elbowed aside by Detroit's models. And Japanese sport-utilities have remained minor players in a major market. Indeed, with 30% of the U.S. car market but only 14% of the faster-growing truck field, normally savvy Japan appears stuck in first gear.

How did Japan miss the historic market shift from cars to trucks? Many wrongly blame the "chicken-war tariff," the 25% charge the U.S. put on imported pickup trucks in 1962 to retaliate against German taxes on U.S. poultry. But there are no tariffs on four-door sport-utilities and minivans--bubbling truck markets where the Japanese have also gone flat.

Instead, Japan's truck troubles are the result of a rare misreading of the U.S. market, manufacturing woes back home, and plain bad timing. In retrospect, it's understandable that the Japanese would be baffled by U.S. truck buyers. There was simply no comparable breed in jam-packed Japan: no big pickup owners, no trailer-towing families needing a massive Chevy Suburban. Moreover, while Toyota Motor Corp. meticulously researched the habits of luxury-car owners before launching its Lexus Div. in 1989, Japanese carmakers never tried to learn what made U.S. truck buyers tick.

BRUTES. Detroit's long reputation for developing trucks with brute strength and time-defying durability has also hurt Japan. "If you're Honda, bringing out a new sport-utility, you better talk about ruggedness, because you're not associated with that," says David Van Peursem, the managing partner at ad agency Bozell who oversees the Jeep account.

Even worse, the Japanese in the late 1980s chose luxury cars for expansion over trucks. Bad move. Japanese luxury cars debuted along with both the 10% luxury tax on expensive autos and America's U-turn from the conspicuous-consumption '80s to the value-conscious '90s. After an initial spurt, sales plateaued: Luxury sales this year are up only 5%, slightly below the overall car market, and profits have nose-dived.

Bleeding red ink at home, Japanese auto companies now don't have the cash flow to move into trucks. For one thing, Japanese carmakers' elegant and sophisticated engines are not appropriate for trucks, for which customers want inexpensive, large, and powerful engines suited for towing. And most of Japan's 4 million units of idle carmaking capacity isn't set up for trucks' larger wheelbases and higher rooflines. When Honda decided to build the Odyssey, for example, it sent an engineer out with a tape measure to see which factories could handle the minivan's dimensions. To make a full-scale assault on the truck market, "it would be billions of dollars for the Japanese," says Chrysler President Robert A. Lutz.

So Japanese auto makers are wary of going full-pedal into trucks. Admits Richard E. Colliver, senior vice-president of American Honda Motor Co.: "The price of admission to develop a vehicle and to accommodate facilities to build that vehicle are more than Honda is willing to spend at the moment."

For now, Japanese truck plans are modest: a few more high-end sport-utilities and a reworking of Toyota's Previa minivan. Even so, Detroit is not taking the possibility of a Japanese challenge lightly. Says Lutz: "Over time, can they nibble at it? Of course, but only if we rest on our oars." U.S. truck makers vow that won't happen.James B. Treece in Detroit


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