Honda, Toyota Try Not Being Japanese

TOKYO -- Japanese, yes. Made in Japan, no.

Among the array of new car models vying for the attention of Japanese buyers this year will be two with unusual pedigrees -- a Thai-made Honda compact and a U.S.-made Toyota sports wagon.

Japan's two biggest carmakers are still testing the waters, but industry analysts say the number of "Not made in Japan" cars in the domestic market looks set to rise.

Both automobiles are evidence of an increasingly globalized approach by Toyota Motor Corp., and Honda Motor Co., which have less need to prop up domestic operations than their rivals.

But they are also the result of very different strategies.

Toyota, the biggest automaker in Japan, is taking a comparatively conservative approach that involves looking at foreign-made cars as a means to fill out the occasional niche segment at home.

Second-ranked Honda, on the other hand, is breaking new ground with Asian imports and offering all-new models that have been tailored for the Japanese market -- moves that have at least some analysts heralding a new era in the industry.

"You could call Honda's efforts the wave of the future," says Christopher Redl, an auto industry analyst at UBS Warburg.

Unveiled last week, Toyota's Voltz, a youth-oriented sports wagon and the twin of General Motors Corp.'s Pontiac Vibe, is only the company's second foreign-made vehicle currently on the Japanese market. The other is the U.S.-made Avalon sedan.

Priced from 1.78 million yen ($15,000) and with a sales target of 1,500 units per month, the Voltz was engineered by Toyota and designed by GM.

It is being built at New United Motor Manufacturing Inc., their 50-50 joint venture based in Fremont, California.

NUMMI was created in 1984 in the midst of an onslaught of Japanese imports in the U.S. market, when Toyota was under pressure to work with U.S. automakers -- and as such the Voltz still carries the political tinge of the past.

Still, the Voltz adds to Toyota's product line-up at little cost and will carry Toyota's strong reputation for quality.

The car has come a long way from the Toyota Cavalier, a model that just slapped a Toyota badge on the GM-built Cavalier.

The Cavalier, introduced in 1996 in response to U.S. automakers' complaints about the lack of access to the Japanese market, woefully undershot its sales targets, managing sales of only 35,400 units in four years.

Many analysts note that Toyota has increased its capacity in the United States and Europe to feed those regions, and it has more than enough factories at home, so it only makes sense that domestic models come from domestic capacity.

But critics argue that Toyota is still bound by its perceived role as a bastion of the Japanese establishment and is therefore reluctant to take advantage of opportunities in Asia that could one day threaten its 12 parts and assembly plants at home.

For Honda, the impetus comes from both its comparatively small scale and its success. The automaker, only half the size of Toyota, is running at full capacity in Japan.

Innovations in its manufacturing system also allow it, on a much greater scale than other major world automakers, to build most of its models at most of its key plants.

"Honda just doesn't have as much capacity at home and because of its flexible manufacturing system, it makes it easier for the company to complement its product line-up," said Takaki Nakanishi, auto analyst at Merrill Lynch.

The compact car made in Thailand, out later this year, will be followed by an expansion in imports from the United States in the first half of 2003, including the luxury MDX sports utility vehicle and the Element -- a youth-oriented sports utility.

That is in addition to three models currently being sold -- the U.S.-made Acura TL, the U.S. version of the Odyssey minivan and the three-door Civic made in Britain.

The long-term potential of Asian imports has excited analysts, who are focused on cost advantages and the opportunities to build up a cheaper Asian supply base.

For some Japanese, though, the imports are another sign of Japan's diminishing role as a manufacturing country.

Honda took another step with Asian imports last month with the release of its first China-built scooter, the 50cc Today.

Priced at 94,800 yen ($800), the world's largest manufacturer of motorcycles says it is the first time in 15 years that it has managed to sell a motorbike in Japan for less than 100,000 yen.