A long and winding road: this time of uncertainty for the automotive industry--often described as "the backbone of Japan"--as it navigates the future in an ultra-competitive global marketplace.

THE JAPANESE AUTOMOBILE INDUSTRY is one of the powerhouses of the world economy, employing one in 10 of the domestic workforce and earning vast amounts of foreign currency through exports and international operations. The industry was one of the cornerstones of Japan's post-war economic success, with vehicle production rising from just over 30,000 units in 1950 to over 13 million units in 1990, still averaging over 10 million units in recent years. The growth of exports has been even more dramatic, increasing more than 1,000-fold over the same period. Although imports increased around 100-fold to a mid-90s peak of 450,000 (falling back to under 300,000 in the last few years), the difficulties faced by foreign manufacturers trying to crack the Japanese market have brought allegations of official and unofficial protectionism.

Yet the Japanese industry is facing a range of challenges in an increasingly demanding global marketplace alongside a largely stagnant economic situation at home. In addition to growing concerns about the environmental effects of gas-powered internal combustion engines and a swath of mergers and alliances across the sector worldwide, there is the rapid emergence of China as both a huge marketplace and a powerful competitor. During this time of upheaval and uncertainty there are beacons of success, though, such as Nissan's well-documented turnaround and the posting of all-time record profits by the world's No. 1 automaker, Toyota.

To listen to some Japan-bashing economists, analysts and commentators, one might believe that the "economic miracle" is over and that the country teeters on the brink of financial, social and political collapse. While there's no doubt Japan faces some serious structural problems (and no sign of anyone with the political will to tackle them), accounts of the nation's total demise have certainly been exaggerated, and the automotive industry is a case in point. The success of Japanese automakers was seen as a symbol of the all-conquering postwar industrial empire. There was shock and some thinly disguised glee in the West when it first became apparent that these industrial giants who had rewritten the rulebook of assembly-line production with their Just-in-Time systems, super-automated factories, high quality / low cost products, company songs and morning exercises were seemingly stumbling. When it emerged that some of the biggest names in the sector were losing money and closing factories, there was surprise and then a realization that even these apparently impenetrable fortresses of efficiency and profitability were in fact susceptible to the same tribulations as everyone else.

While things are not yet all rosy in the garden, overall the Japanese automotive industry is back in profit, continuing its expansion overseas and even managing a small growth in domestic sales in the year to March 2003. This has been achieved through alliances with foreign partners, cost-cutting, continued innovation with new models, reorganizing dealership networks, profitable overseas production and the continual striving for quality that was one of the foundations of their original success.

The Japan Automobile Manufacturers' Association (JAMA), has chosen the theme "Challenges & Change" for this year's Tokyo Motor Show to reflect the current state of affairs and to express JAMA's stance of "... continuing to take on the challenge of the various issues facing the automotive industry head-on." JAMA concerns itself with all matters relating to the Japanese automotive industry, including safety and environmental issues. Toyokazu Ishida serving as Assistant Director General & Group Leader (Advertising & Development) for the Tokyo Motor Show Department, sets out JAMA's position: "Regarding environmental issues, establishing systems in anticipation of the Recycling Law (slated for Fall 2004), improvement of fuel-efficiency and gas emission capabilities, and development and dissemination of clean energy cars such as those using fuel cells are being planned. Additionally, JAMA is working together with the government and related industries for the improvement of fuel quality and traffic flow. This is part of our contribution to society through advances of technology for environment and safety. Regarding safety, JAMA is striving for improvement of vehicle safety with the utilization of Intelligent Transport Systems (ITS) and Advanced Safety Vehicle (ASV)."

Recent years have seen a major realignment in the worldwide automotive industry, with mergers, takeovers and the big manufacturers entering into various types of alliances with each other. Some regard this as an inevitable move toward a few huge conglomerates in each sector dominating the global marketplace. However this is an oversimplification, and statistics both support and contradict this assertion.

Seventy years ago there were said to be 270 carmakers in existence, whereas today there are seven major groups accounting for the lion's share of worldwide sales. On the other hand in the late 60s the then big three car makers--General Motors, Ford and Chrysler--had around half the worldwide market share between them. Today's big three--GM, Ford and Toyota--control around 36 percent of global production. Whichever way you look at it, though, some of the major players have linked up in ways that would have been hard to predict a decade ago. Groups such as Daimler-Chrysler-Mitsubishi have brought together manufacturers and their respective business cultures from Europe, the US and Japan. After decades of the West flocking to learn how to run industry from the Japanese, the automotive industry has been one of the first to embrace the flow of knowledge in the opposite direction. As well as Nissan's iconoclastic Ghosn, Daimler-Chrysler's Rolf Eckrodt now heads Lip Mitsubishi Motors and another foreign executive, Wilfried Porth, has been appointed to lead Mitsubishi Fuso, the de-merged truck division in which Daimler-Chrysler holds a 43 percent stake. Mazda, who has recently greatly increased profitability, appointed its first Japanese president since June 1996, when Ford sent in Henry Wallace.

It is not only the car makers who are pursuing international tie-ups but also those in the associated industries. One of these partnerships is the one which has grown up between the Kerridge Computer Company Ltd. from the UK and Samsung SDS Co. Ltd. from South Korea, who since the mid 1990s have been supplying and implementing the Kerridge Autoline dealer management system in Korea, Japan, China, Taiwan, Hong Kong and Singapore. They cemented the relationship with a joint venture, KAS Systems KK, launched on June 3, 2002. "The Autoline system is not only a fully integrated computer solution for all the daily transactional activities of a motor dealership (including Accounting, Parts, Service, Sales and CRM), it is also a powerful business management tool that provides accurate, timely information, reporting and positive control processes. Autoline can also be delivered with additional facilities for vehicle importing and distribution, warranty management and web integration," explains David Boniface, Sales Director at KAS.

Foreign carmakers wishing to become established in the Japanese market have adopted various strategies, including focusing on specialized niche markets and providing services over and above the norm. Volvo (now part of the Ford group), in addition to its regular chain of dealerships in Japan, has established a worldwide network allowing expats to take advantage of certain tax situations with a uniquely comprehensive service system. The TDS (Tourist & Diplomatic Sales) Program is a global network of Volvo dealerships, exclusively dedicated to making the purchase of a Volvo as smooth and simple as possible. In existence since the 1950s, Volvo TDS offers the expatriate, diplomatic and military community the chance to purchase a Volvo vehicle without having to worry about cross-border vehicle regulations (which Volvo takes care of). Michael Blom, assistant manager of the International Sales Section, Volvo Cars, Roppongi, describes the basic advantages: "The 'Carnet de Passage' system enables you to purchase a Volvo ordered to match your home country's technical requirements and at the same time save money. When driving the car in Japan for 6-12 months and thereafter shipping it home, many European countries grant you tax ex-emption because the car has been used overseas. The tax exemption varies for each country, but can in many cases reach quite substantial amounts of money, and as an additional benefit, no car-taxes or parking registration fees are payable in Japan under this system. For people returning home within 10-12 months, this is an easy and effective way to acquire a new Volvo for a reduced price."

The emerging market that the global automobile industry has been focusing on over the last few years is of course China. While none of those trying to tap this possible gold mine have had a completely smooth ride, Volkswagen is out in front, followed by Toyota and then GM, with Suzuki and Honda also making their presence felt.. Problems have come from bureaucracy, changing legal situations, local partners and the counterfeiting problem, which is not confined to software, music and clothes but extends right through to copies of new vehicles hitting the streets. According to the JAMA report, "It is estimated that over 80 percent of the two-wheeled vehicles produced are counterfeit/copied goods. There is a need to create a consciousness of intellectual property." By 2020, however, China is predicted to become the third biggest marketplace after the US and Europe, with exports overtaking those of South Korea and rivaling those of Japan. With wages around a tenth of the cost of those in Japan and labor costs amounting to 14 percent of the price of a vehicle, the attractions are clear.

To witness the latest developments in the auto industry from Japan and the world, there will be no better place to be than the 37th Tokyo Motor Show at the Makuhari Messe in Chiba from October 25th to November 5th. Over a million people from both the industry and the driving public are expected to attend over the course of the event, which will include symposiums and discussions as well as chances to test drive new models. As David Boniface from KAS puts it, "The Tokyo Motor Show is one of the world's best showcases for the automotive industry and attracts decision makers from the automotive industry throughout Asia."

DIRECTORY

When calling from outside Japan please dial the country code (81) first, then 3 for Tokyo (omitting the 0), followed by the number.

Japan Automobile Manufacturers Association, Inc. (JAMA)

03-3211-8919

(Tokyo Motor Show Department)

Fax: [phone]

(Tokyo Motor Show Department)

Otemachi Bldg., 6-1, Otemachi 1 Chome, Chiyoda-ku, Tokyo 100-0004

http://www.jama.or.jp/eng/

(JAVA Website)

http://www.tokyo-motorshow.com/eng/

(Tokyo Motor Show Website)

Contact Person(s): Toyokazu Ishida [e-mail]

JAMA is a nonprofit organization composed of 14 Japanese automobile and motorcycle manufacturers to support the sound development of Japan's automobile industry and to contribute to economic and social welfare. Established in 1967, JAMA is a nonprofit industry association currently composed of 14 Japanese automobile and motorcycle manufacturers, and works to support the sound development of Japan's automobile industry and to contribute to economic and social welfare. In the 21st century, it takes its role and mission even more seriously--to help ensure a bright future for the motor vehicle industry while meeting society's demands for increased environmental protection and greater automobile safety.

Systems KK

KAS Systems KK

03-5405-2061

Fax: [phone]

Asakawa Building 3F, 2-1-17 Shiba Daimon, Minato-ku, Tokyo 105-0012

http://www.kas-systems.co.jp/

Contact person(s):

David Boniface

Aiko Sugiura

[e-mail]

KAS Systems supply, install and support the worlds leading automotive dealer management system, Autoline, from Kerridge. It is the most widely endorsed system, now available in Japan and throughout Asia.

TOKYO AUTO TRADING LTD.

Tokyo Auto Trading

090-8773-0907

http://bigfoot.com/~tokyoautos

Contact person(s): Colin Shea

[e-mail]

Colin Shea runs Tokyo Auto Trading, the auto dealer of integrity in Japan. Any make, new or used supplied. Leasing, insurance, trade in, shipping etc. Stay sane!

VOLVO

Volvo International Sales

03-3585-2627

Fax: [phone]

Volvo Cars Roppongi, 4-1-4 Roppongi, Minato-ku, Tokyo 106-0032

www.expat.volvocars.com

Contact Person(s): Michael Biota

[e-mail]

Returning expats, buy a new Volvo on very special terms. All models meeting all countries' legal requirements. Arriving expats, we arrange new & used Volvos with finance & lease programs.

Systems KK

Distributors of the Kerridge Autoline[TM] Dealer Management System

The Autoline[TM] Dealer Management System has been developed over 26 years and is used in 40 countries worldwide. If you really want to control your business and increase your profitability then Autoline[TM] is the only system to choose

Applications include--

Accounting / Financial reporting Parts stock control / Purchasing / POS Service invoicing / Workshop control Vehicle showroom sales /Invoicing CRM / Marketing / Call Centre Advanced flexible reporting tools Electronic forms Email and diary facilities Website interface

Feature include--

Multi-lingual *, Multi-company, Multi-franchise Easy to use--Graphical User Interface CRM / Marketing led functionality On screen help, browser interface All modules fully-integrated Integration with Microsoft applications Manufacturer interfaces Large established user base /tried and tested Financial controls / best practices incorporated

* Languages include Japanese, Korean and Chinese, all bi-lingual with English

For more information please contact David Boniface at KAS Systems KK, Asakawa Building 3f, 2-1-17 Shiba Daimon, Minato-ku, Tokyo 105-0012 Tel [phone]. Fax [phone]. Email [e-mail]