ENERGY CRISIS AIDED JAPANESE IMPORTS

THE CURRENT SKYROCKETING PRICES OF GASOLINE stirred up some powerful memories of the original energy crunches of 1973 and especially 1979.

Those were significant events for a number of reasons, not the least of which was that they solidified Japanese automakers' market share in this country.

Prior to the Arab oil embargo of 1973, the "Big Three" U.S. auto producers - General Motors, Ford, and Chrysler - all but had the U.S. market to themselves.

It wasn't until after American consumers' supply of available gasoline was seriously threatened that the current leadership realignment of manufacturers took place.

Until the first OPEC oil embargo, automobile gas efficiency was a relatively unimportant issue. Fuel-efficient compact vehicles were principally of foreign production and constituted a small percent of the U.S. market. The efforts to produce fuel-efficient compact cars by U.S. automakers did not get serious until the mid-to-late '70's.

When the Iranian oil embargo happened in 1979, coupled with dire (and inaccurate) predictions of a disappearance of fossil fuel supplies in 13 years, the feathers really hit the fan in Detroit.

U.S. consumers panicked as the retail gasoline industry began a rationing program at filling stations across the nation. Gas stations would display a green flag if they had gas to sell. A red flag meant no gas for that day.

On a green flag day, motorists would line up for blocks to buy gas and people would even buy a few gallons to top off partially full tanks so they wouldn't be caught short.

Domestic dealers were finding strong resistance to Detroit's full-size fuel-hungry offerings. Individual vehicle owners, realizing the gas shortage was real, began trading in their traditional gas guzzlers for smaller fuel-efficient Japanese vehicles.

The Japanese infiltration of the U.S. (and the world) vehicle market was dramatically aided by the following circumstances:

A General Motors policy decreed that no individual GM dealer could own and operate more than one GM franchise, This prevented Buick, Olds and Cadillac dealers from taking on Chevy or Pontiac dealerships. This drove many GM dealers to sign with Japanese nameplates, providing a ready-made dealer organization for Japanese manufacturers.

In 1979, few domestic vehicle manufacturers gave serious thought to producing compact cars and their attendant fuel efficiency. Big profits were in full-size products. They were caught short as their full-size vehicle owners began shopping in earnest for fuel efficient vehicles, mainly Japanese.

For many years the term "made in Japan" meant inferior quality. But the Japanese automakers adapted the quality control statistical theories of W. Edward Deming, an American who thereupon revolutionized Japanese quality control production methods (after first being rebuffed by American manufacturers who thought his theories were too "egalitarian," giving too much decision-making authority to workers).

Consumers throughout the world began experiencing the superior quality in Japanese products.

In the U.S., former owners of Detroit's full-size offerings were pleasantly surprised by the quality of their newer and smaller Japanese vehicles.

Inferior quality details commonly found in domestic vehicles were non-existent in their Japanese vehicles. Nameplates like Toyota, and Honda became leaders in the U.S. marketplace.

Primarily, the reason for the Japanese successful entry into U.S. automobile market during the energy crunch was their ability to build fuel-efficient compact vehicles which had heretofore been anathema for domestic vehicle dealers and manufacturers.

As U.S. consumers and new vehicle dealers signed on for Japanese vehicles it became readily apparent that there was a significant difference from what they were used to getting from their domestic manufacturers.

For consumers, it was trouble-free performance which lessened the number of trips back to the dealer for warranty service.

The impact on domestic dealers who had taken on imports as additional survival products was dramatic.

After years of unilateral relationships with Detroit, they were treated with respect and appreciation by their new franchisers.

Of course, Japanese importers were grateful over discovering a ready-made network of established dealers.

Finally, the value of the yen versus the dollar gave Japanese manufacturers a huge advantage in cost control, allowing them to outperform the domestic competition price-wise hands down. That would later tilt in the other direction, causing Japanese imports to skyrocket in price.

I doubt the Japanese imports would have carved out such a large initial chunk of the world new vehicle market without the gasoline shortages of the 1970s.

Nat Shulman was owner of Best Chevrolet in Hingham, MA for many years.