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JAMA: Pessimism about Japan Auto Agreement Based on Insufficient Analysis

13 November 1997

Administration's Pessimistic Conclusions on Japan Auto Agreement Are Based on Insufficient Analysis, JAMA Newsletter Reports Today

    WASHINGTON, Nov. 13 -- Administration statements expressing
discouragement with progress under the US-Japan Auto Framework Agreement are
based on an insufficient examination of changes taking place in Japan's
automotive markets and in some cases overstated data, according to Japan Auto
Trends released today.
    "Careful analysis and the facts show that instead of the US Trade
Representative's (USTR) assessment that there is 'little cause for optimism,'
there is actually considerable cause for optimism," said William C. Duncan,
General Director, Japan Automobile Manufacturers Association USA (JAMA).
    Among the points brought out in Japan Auto Trends:

    -- The Big Three auto companies and the Clinton Administration blame the
       11.8% decline in car import sales in Japan so far this year (through
       September) on lack of market access.  Yet the bulk of the decline is
       due to a 51.4% decline in imports from Japanese-owned plants in the
       U.S.  Imports from non-Japanese companies fell only 2.3%, only slightly
       more than the overall 1% decline in the market.
    -- Big Three car imports into Japan fell 20% due to weak consumer
       acceptability of certain product lines, notably the Ford Taurus,
       Chevrolet Cavalier, and Chrysler Neon.  Overall Ford sales fell 42%.
       Other importers increased sales, notably Rover up nearly 15%, VW up
       over 6% and Audi up 14%. "This data proves that the decline in import
       sales in Japan so far this year is due to product, not market access."
    -- A slow increase in new dealerships reflects company strategy, not
       access. A new study shows that importers in Japan, including the Big
       Three, are consolidating dealers for efficiency -- to gain more sales
       from existing dealerships.  They have not been significantly expanding
       their overall number of dealerships.
    -- A US government report overstates the size of Japan's auto parts
       replacement market raising unrealistic expectations -- the market is
       about $10 billion, not the Administration's estimated $65 billion.

    "The agreement was designed to create and develop opportunities in Japan's
market.  It was not designed either as a device to force market share through
numerical targets or worse yet as a setup to close the US market.  If
opportunities are to be recognized, the market must be scrutinized for all its
parts and not hidden in an overstated whole," Duncan concluded.
    Japan Auto Trends is a bi-monthly publication examining developments in
Japan's auto markets.  This month's issue comes with a new statistical insert
detailing sales of imports by company, by country and by market segment.  The
publication is also available on the JAMA Web site -- http://www.japanauto.com.
    JAMA, headquartered in Tokyo, has offices in Brussels, Singapore and
Washington, DC.

SOURCE  Japan Automobile Manufacturers Association, Inc.