automobile industry, the business of producing and selling self-powered vehicles, including passenger cars, trucks, farm equipment, and other commercial vehicles. By allowing consumers to commute long distances for work, shopping, and entertainment, the auto industry has encouraged the development of an extensive road system, made possible the growth of suburbs and shopping centers around major cities, and played a key role in the growth of ancillary industries, such as the oil and travel businesses. The auto industry has become one of the largest purchasers of many key industrial products, such as steel. The large number of people the industry employs has made it a key determinant of economic growth.

Industry History

Although ancient Chinese writers described steam-powered vehicles, and both steam- and electric-powered cars competed with gas-powered vehicles in the late 19th cent. Frenchman Jean Joseph Étienne developed the first practical internal-combustion engine (1860), and later in the decade several inventors, most notably Karl Benz and Gottlieb Daimler, produced gas-powered vehicles that ultimately dominated the industry because they were lighter and less expensive to build. French companies set the design of the modern auto by placing the engine over the front axle in the 1890s and U.S. manufacturers made important advances in the mass production of the auto by introducing cars with interchangeable machine-produced parts (one such car was created by Ransom E. Olds in 1901).

In 1914 Henry Ford began to mass produce cars using assembly lines. In addition, his practice of providing loans to consumers to buy cars (1915) made the Model T affordable to the middle class. In the 1920s, General Motors further changed the industry by emphasizing car design. The company introduced new models each year, marketed different lines of cars to different income brackets (the Cadillac for the rich; the Chevrolet for the masses), and created a modern decentralized system of management. U.S. auto sales grew from 4,100 in 1900 to 895,900 in 1915, to 3.7 million in 1925. Sales dropped to only 1.1 million in 1932 and during World War II, the auto factories were converted to wartime production.

The Modern Industry

After 1945, sales once again took off, reaching 6.7 million in 1950 and 9.3 million in 1965. The U.S. auto industry dominated the global market with 83% of all sales, but as Europe and Japan rebuilt their economies, their auto industries grew and the U.S. share dropped to about 25%. Following the OPEC oil embargo in 1973, smaller, fuel-efficient imports increased their share of the U.S. market to 26% by 1980. In the early 1980s, U.S. auto makers cut costs with massive layoffs. Throughout the 1990s, imports—particularly from Japan—took an increasing share of the U.S. market.

Beginning in the early 1980s, Japanese and, later, German companies set up factories in the United States; by 1999, these were capable of producing about 3 million vehicles per year. As a result, the three big U.S. auto makers now produce less than two thirds of the cars sold in America. In the early 1990s, over $140 billion worth of motor vehicles and parts were produced in the United States by companies employing more than 210,000 workers. The credit crisis that began in 2008 and the associated recession resulted in significant losses for most automobile manufacturers. The U.S. industry was especially hard hit, losing sales as well from late 2007 to mid-2008 as customers sought more energy-efficient cars as gasoline prices skyrocketed, and in late 2008 U.S. automotive companies sought government financial aid. Subsequently, the government forced Chrysler and General Motors to declare bankruptcy (2009) and reorganize in an attempt to create viable companies; the U.S. and Canadian governments and the United Auto Workers owned much of the new companies.

Complaints about auto pollution, traffic congestion, and auto safety led to the passage of government regulations beginning in the 1970s, forcing auto manufacturers to improve fuel efficiency and safety. Auto companies are now experimenting with cars powered by such alternative energy sources as natural gas, electricity, hydrogen fuel cells, and solar power.

Japan is the world's largest automobile manufacturer and exporter by number of vehicles manufactured in a year, and has three of the world's ten largest automobile manufacturers. In addition to its large automobile industry, Japan also is the home to manufacturers of other types of vehicles, like powersports vehicle manufacturers Kawasaki and Yamaha, and heavy equipment manufacturers Kubota, Komatsu, and Hitachi Heavy Industries. It is home to automakers such as Toyota, Honda, Nissan, Suzuki, Mitsubishi, Mazda, Subaru, etc.

History

1900s to 1950s

The Japanese automotive industry began in 1902, with limited production of small (12 horsepower) vehicles by a number of companies on a trial basis. However, Japanese companies were unable to compete against imported cars (mostly from the United States), especially after the 1923 Great Kanto Earthquake. Ford and General Motors established subsidiaries in Japan at the start of the Shōwa period, and assembled trucks and cars from imported parts. In 1929, 16,000 vehicles were imported into Japan, as opposed to only 1,000 produced by Japanese domestic companies. Cars and imported fuel were expensive for the ordinary Japanese citizen, so buses were popular. In 1923, there were about 100,000 automobiles in the country (around 65,000 cars, 35,000 trucks). The majority of these cars were taxis.

The zaibatsu were involved in joint ventures to produce and sell cars in Japan under license in the middle to late 1910s. The companies went about this by either designing their own trucks (the market for passenger vehicles in Japan at the time was small), or partnering with a European brand to produce and sell their cars in Japan under license. Such examples of this are the forerunner of Isuzu partnering with Wolseley Motor Company (UK), and the Mitsubishi Model A, which was based upon the Fiat Tipo 3. From 1935, increasingly restrictive import duties help protect new Japanese manufacturers, such as Nissan, Toyota, and Hino Motors. The demand for domestic trucks was greatly increased by the Japanese buildup to war before World War II.

However, outside of the major cities, the road system of the Empire of Japan was limited. The unfavorable topography of Japan favored the development of transport by sea, and motor transport had a low priority to the government as opposed to the railroad system.

During the Korean War (1950–1953), the United States government commissioned Japanese automobile manufacturers to produce army trucks. This was advantageous due to Japan's proximity to Korea, and the United States had close ties to Japan because the country was still under Allied occupation since the end of World War II. These army truck commissions led to enormous growth in Japan's auto industry, leading to the boom of Japanese cars during the 1960s.

From its beginnings, nearly all of the Japanese automakers were associated with zaibatsu, or later keiretsu. In the post-war period, these large companies had close ties with the government, who urged them to absorb all of the smaller car makers into large brands that could be marketed internationally. Nissan Motor Co., Ltd. was a prime example, taking control of Prince Motor Company and many other smaller companies to form a large brand. Mitsubishi Motors was a part of a large keiretsu as well. However, one of the lone exceptions of the time was Honda. The company was formed as a tiny firm, and had (and still has) experienced no major takeovers or mergers.

During the massive expansion of many Japanese companies after WWII, many of the automakers sought to expand into other markets, mainly the U.S. In 1957, the first Japanese car to be imported to the United States was the Toyota Crown, followed by the 1958 Datsun 1000(PL210).

1960s to today

During the 1960s, Japanese automakers launched a bevy of new kei cars in their domestic market. These tiny automobiles usually featured very small engines (from 360cc to 600cc) to keep taxes much lower than larger cars. The average person in Japan was now able to afford an automobile, which boosted sales dramatically and jumpstarted the auto industry toward becoming what it is today. The first of this new era, actually launched in 1958, was the Subaru 360. It was known as the "Lady Beetle", comparing its significance to the Volkswagen Beetle in Germany. Other significant models were the Mitsubishi 500, Mazda Carol, and the Honda N360.

Rapidly increasing domestic demand and the expansion of Japanese car companies into foreign markets in the 1970s further accelerated growth. Automobile production in Japan continued to increase rapidly after the 1970s, as Mitsubishi (as Dodge vehicles) and Honda began selling their vehicles in the US. Even more brands came to America and abroad during the 1970s, and by the 1980s, the Japanese manufacturers were gaining a major foothold in the US and world markets.

With Japanese manufacturers producing very affordable, reliable, and popular cars throughout the 1990s, Japan became the largest car producing nation in the world in 2000. However, its market share has decreased slightly in recent years, mainly due to new competition from China and India and a shift in the focus of Japanese government policies. Nevertheless, Japan's car industry continues to flourish, and in the first quarter of 2008 Toyota surpassed American General Motors to become the world's largest car manufacturer.

Timeline of the Japanese car industry

• 1907 - Hatsudoki Seizo Co., Ltd. established
• 1911 - Kwaishinsha Motorcar Works established
• 1917 - Mitsubishi Motors 1st car
• 1918 - Isuzu 1st car
• 1924 -1927 Otomo
• 1931 - Mazda Mazdago - by Toyo Kogyo corp, later Mazda
• 1935 - Toyota 1st car
• 1937 - Suzuki 1st prototypes
• 1952-1966 Prince Motor Company (integrated into Nissan)
• 1954 - Subaru 1st car
• 1963 - Honda 1st car
• 1967 - Japan Automobile Manufacturers Association (JAMA) is founded
• 1986 - Acura is launched in the US by Honda
• 1989 - Lexus is launched in the US by Toyota
• 1989 - Infiniti is launched in the US by Nissan
• 2003 - Scion is launched by Toyota

Manufacturers in 2005

During 2005 Japan manufactured 10,799,299 motor vehicles. The 12 following makers have their factories in Japan.

Toyota

Toyota (2005)

Total motor vehicles	Passenger cars	Light commercial vehicles	Heavy trucks	Buses
3 789 582	3 374 526	176 909	185 910	52 237

Nissan

Nissan (2005)

Total motor vehicles	Passenger cars	Light commercial vehicles	Heavy trucks	Buses
1 451 212	1 221 086	83 885	140 188	6 053

Honda

Honda (2005)

Total motor vehicles	Passenger cars	Light commercial vehicles	Heavy trucks
1 261 994	1 213 352	48 642

Suzuki

Suzuki (2005)

Total motor vehicles	Passenger cars	Light commercial vehicles	Heavy trucks
1 090 786	921 008	169 778

Mazda

Mazda-Autoalliance (2005)

Total motor vehicles	Passenger cars	Light commercial vehicles	Heavy trucks
864 929	806 064	56 434	2 431

Daihatsu

Daihatsu (2005)

Total motor vehicles	Passenger cars	Light commercial vehicles	Heavy trucks	Buses
724 509	539 206	172 107	13 196

Mitsubishi

Mitsubishi (2005)

Total motor vehicles	Passenger cars	Light commercial vehicles	Heavy trucks
664 900	555 540	105 335	4 025

Fuji-Subaru

Subaru (2005)

Total motor vehicles	Passenger cars	Light commercial vehicles	Heavy trucks
469 497	385 953	83 544

Isuzu

Isuzu (2005)

Total motor vehicles	Passenger cars	Light commercial vehicles	Heavy trucks
210 253		53 049	154 028	3 176

Daimler-Chrysler

Mitsubishi Fuso Truck and Bus Corporation (2005)

Total motor vehicles	Passenger cars	Light commercial vehicles	Heavy trucks	Bus and Coaches
129 513	24 635	96 824	8 054

UD Nissan Diesel

UD Nissan Diesel (2005)

Total motor vehicles	Passenger cars	Light commercial vehicles	Heavy trucks	Buses
410 712	630	38 917	1 524

References

Further reading

• Robert Sobel (1984). Car Wars: The Untold Story. E. P. Dutton. ISBN 0-525-24289-9.