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No. 352, January 1999

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American Companies in Japan


GENERAL MOTORS CORP. has given affiliate ISUZU MOTORS LTD. greater responsibility for engineering its light-duty and medium-duty truck platforms. To help the money-losing truck manufacturer carry out its added work load, GM will spend $448.7 million to buy new Isuzu shares. That purchase will boost the stake of the world's top automotive maker in Japan's number-two truck builder to 49 percent from the 37.5 percent GM has owned since 1971. GM's closer relationship with Isuzu came as little surprise to industry analysts, although some had speculated that the American company would buy Isuzu outright or at least acquire a majority stake in it. These experts see Isuzu's expertise in engineering light trucks and medium- duty commercial vehicles as a way for GM to bolster its position over the longer term in the extremely competitive U.S. market and in developing countries, especially in Asia. GM already has recognized its affiliate's capabilities. In 1997, it gave Isuzu, which is known internationally for its diesel engine technology, lead design responsibility for the diesel engines used in GM trucks. The two also announced an Ohio joint venture last September to build a direct-injection, V-8 diesel engine for certain of GM's light-duty trucks (see Japan-U.S. Business Report No. 349, October 1998, p. 9). Moreover, GM and Isuzu already have collaborated on two trucks and are working on a third. Over the next three to five years, insiders say, the companies could be sharing a considerable number of light truck and commercial vehicle platforms. Interestingly, GM's moves to strengthen its relationship with Isuzu on trucks came within months of efforts to tap the expertise of affiliate SUZUKI MOTOR CORP. on small, affordable and rugged vehicles for developing markets (see Japan-U.S. Business Report No. 349, October 1998, p. 29).

The "main dealer" marketing strategy adopted by CHRYSLER JAPAN SALES LTD. in 1995 -- under which it wants to have at least one showroom in each of Japan's 47 prefectures devoted exclusively to CHRYSLER CORP. products -- is making progress, if slower than expected. The company now can count 27 main dealers with the signing of an agreement with a used vehicle dealer organization in Kobe to open Chrysler stores in Hyogo prefecture. The first was to be in operation in January, with a second to follow sometime in 2000. The new main dealer expects to sell 200 Jeep sport-utility vehicles, Voyager minivans and Chrysler cars a year.

The 300-plus stores operated by FORD SALES JAPAN LTD. will have two new products to sell in 1999. The first, already in showrooms, is the MAZDA MOTOR CORP.-built Laser Lidea compact car. Available as a sedan or a station wagon with five engine options and a choice of two-wheel or four- wheel drive, the Laser Lidea has a suggested retail price of between $10,600 and $16,100. Ford Sales is looking for monthly volume of 500 units. In March, the Ka minicar will arrive at dealerships. Built in Europe by FORD MOTOR CO., the right-hand-drive vehicle will only be sold with a manual transmission. The absence of an automatic transmission option, dealers say, could jeopardize achievement of Ford Sales' goal of selling 5,000 Ka minicars a year.

An exchange rate of ¥117=$1.00 was used in this report. aaaaaa

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