Parts aren't just parts if they're imported

Are U.S. partsmakers making inroads into Japan's aftermarket? Certainly not as much as they'd like. Estimates of the size of Japan's aftermarket vary from $10 billion to $48 billion, depending on what's counted and where the yen-dollar exchange rate is pegged, so it's tough to tell exactly how much market penetration foreign companies have. Adding to the complexity is a Byzantine distribution system that puts so many middlemen between manufacturers and customers that prices often end up four times higher than they start. The U.S.-Japan Automotive Framework Agreement of August 1995 was designed to change certification rules and get more U.S. parts into Japan. That has helped some, but not as much as U.S. companies expected. "The Framework talks have turned the aftermarket upside down in the last two years, but the main beneficiaries have been Japanese," laments one U.S. government official. He says Toyota Motor Corp.'s promises to use 20% imported parts at its TACTI retail chain "have not been kept." The Japanese argue that U.S. companies still aren't sufficiently committed to marketing in Japan. "We attend the annual (parts) shows in Las Vegas and come away wondering whether U.S. makers are really willing to export to Japan," says Shige Debarry, marketing manager for the Autobacs Seven retail chain in Japan.

Samsung shoots for silky smooth ride

Not content with the nearly 125,000 miles (200,000 km) of endurance runs on test tracks and in lab simulations, South Korea's Samsung Motors Inc. puts its new SM525V through a brutal 22,000-mile (35,000 km) marathon retracing the route of the ancient Silk Road from North Korea to Portugal. The test drive was as much publicity stunt as engineering shakedown; a Korean Broadcasting Co. camera followed the car to produce a one-hour television documentary. The SM525V - based on the Nissan Maxima - handled the widely ranging terrain along the trek with only minor, routine servicing, Samsung reports. While many industry watchers in Korea call the journey "sheer genius," American observers say it represents sheer guts. The greatest fear of American companies that try adventurous, highly documented field trials is that they will have a breakdown along the way and wind up "shooting themselves in the foot," says one industry watcher.

Ministry scolds automakers for record recall in Japan

Japan's Transport Ministry tells automakers to get a better grip on quality control after a record 2.59 million vehicles were recalled there in 1997 due to mechanical problems. That's up 480,000 cars from 1996 levels, when automakers ordered back 2.11 million vehicles. The Transport Ministry attributes the decline to sloppy quality control of engines, brakes and fuel systems, made worse by manufacturers' cost-cutting efforts amidst Asia's ongoing economic crisis.

Italian rumor mill full speed ahead

Despite repeated denials, Fiat SpA officials fail to stop publication of an article suggesting Fiat would be gobbled up by the Daimler-Benz AG/Chrysler Corp. alliance. Leading Italian newspaper La Repubblica, in a cover story published in its weekly financial supplement, has soon-to-be Fiat chairman, Paolo Fresco, overseeing major changes, including a possible merger. The article points out that Fiat would complement DaimlerChrysler both in product and market coverage. Fiat's strengths are in southern Europe, Latin America, Eastern Europe and Turkey, places where Daimler and Chrysler are weakest. As for product, Fiat is strong in small and medium-sized cars, whereas Mercedes is positioned at the high end and Chrysler's forte is in minivans, sport/utility vehicles and light trucks.

Slump may slam door on Hyundai in Poland

The impact of South Korea's financial crisis is being felt all the way to Poland, where Hyundai Motor Co. Ltd. cancels plans to build a plant with Sobieslaw Zasada Centrum SA. Hyundai and Zasada were to set up a $67.8-million facility to assemble 30,000 to 50,000 subcompact Atos cars annually using the plant as a launching pad for Eastern Europe. The Polish government had granted the companies permission to import the vehicle kits for the Atos and midsize Accent, already being assembled in Poland, duty free under the condition they build a plant. But financial pressures are forcing Hyundai to back out.

Compiled by Ward's Automotive International