Evolution of success in the Japanese automotive industry

“The work of helping Toyota grow and of helping Toyota’s people realize their ambitions has for me been a kind of mission. Yet I also realize that a corporation is just one part of society, that Japan is just one society in the world, and that the pursuit of only Toyota’s interests would be folly. The policies of a corporation must conform not only to the interests of Japan, but also to the needs of every society, however great or small. This thought occupies my mind even during the busiest of days.”1
-Shotaro Kamiya (Founder of Toyota)

Fifty years ago, American consumers could hardly have imagined seeing a flux of Japan-made cars on their doorsteps, much less owning one. Japan, war-torn and politically turbulent, was far removed from producing world players in an industry so thoroughly dominated by American and European developers. Yet, today tells a different tale altogether: as of 2007, Toyota assumed the role of the world’s largest auto manufacturer2, surging ahead of American rivals Ford and General Motors. Many of Japan’s other car manufacturing companies, such as Nissan and Honda, also occupy top seats on the ladder. Few countries have been able to engineer ascension within such an expansive industry as quickly as Japan, now known across the globe for their space-efficient, gas-friendly, and readily-affordable vehicles.

[...] The future of Japanese automobiles, even in the face of both America and Japan’s economic recessions, is positive. Most large Japanese companies have engaged in hybrid production and have production facilities worldwide. The question now is if they are ready for the radical changes in the marketplace, namely the collapse of America’s top manufacturers and budding competition from Asian neighbors China, Korea, and Japan. Politically too, the phase of rampant Japanese growth is over. Japan lacks the resources to provide the same kinds of loans, subsidies, and bailouts that it once showered successful companies with. [...]

[...] In the same year, the automotive industry represented about 13% of Japan’s total industrial production.[22] Therefore, protection of this industry’s exports is of great importance to the Japanese government. The Development Bank of Japan and the Small and Medium Companies Finance Corporation provided manufacturers with low-interest loans for capital in technological development under the Machinery Industry Promotion Act of 1956, the Machinery Electronics Act, and the Machinery Information Act. High tariff barriers limited foreign entry, while a devaluated Yen made Japanese cars more appealing worldwide. [...]

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