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Investment in Japan's Auto Parts Market Is Key to Success for U.S. Suppliers

21 June 2000

Investment in Japan's Auto Parts Market Is Key to Success for U.S. Suppliers

    WASHINGTON - No longer can manufacturer/supplier relationships be measured 
in terms of corporate nationalities and reciprocal trade flows, according to 
William C. Duncan, General Director, Japan Automobile Manufacturers Association 
in today's issue of Japan Auto Trends.

    "Consideration must be given to the dynamics of new competition,
technological exchange between companies and the increasing flow of direct
investment between nations or risk regressing into the counterproductive
rhetoric and 'results-oriented' formulas of the mid-1990s," Duncan said.

    Foreign parts and accessories are about five percent of the total sales in
Japan and retail executives don't expect that situation to change. However,
the face of Japan's auto parts supply is beginning to change with increasing
evidence that foreign companies are playing a role through direct investment,
marketing joint ventures and technological exchange with Japanese auto parts
companies.

    For example, joint ventures have included Goodyear Tire and Sumitomo
Rubber; Robert Bosch and Zexel, a diesel fuel injection pump maker; Delphi
Automotive and Akebono brake; and Valeo with Ichikoh Industries, a leading
automotive supplier.

    "These multinational auto parts companies seek to sell parts as original
equipment to the Japanese vehicle manufacturers as well as to the replacement
aftermarket. The market generally favors the investor in Japan," Duncan added.

    Ultimately, Japan's vehicle manufacturers are more likely to rely on local
suppliers, be they foreign or domestically owned. The locally based supplier
is better able to meet the requirement of modern management technology, i.e.
inventory control, rapid delivery and interface with the manufacturer during
design and production.

    In addition, Japan Auto Trends presents the globalization focus of
Toyota's Chairman Hiroshi Okuda who was recently elected as the new chairman
of the Japan Automobile Manufacturers Association (JAMA). Mr. Okuda believes
JAMA "should take a leadership role in promoting harmonization and world
vehicle standards by contributing our know-how to the world."

    Japan Auto Trends quarterly Executive Highlight also features Katsuhiko
Kawasoe, President of Mitsubishi Motors Corporation. Mr. Kawasoe, who became
President in 1997, has been realigning the company's business to improve
profitability. In addition to internal measures, Mitsubishi has undertaken
global and strategic tie-ups with Daimler-Chrysler in the passenger vehicle
market and Volvo in the commercial truck and bus market.

    JAMA, located in Tokyo, has offices in Brussels, Singapore and Washington,
D.C.