US carmakers eat dust of Japanese competitors

* US new-car sales off 9.5 percent as of mid-February. * More than 200,000 autoworkers on long-term layoff. * Chrysler losses mounting, Ford losing hundreds of millions on North American auto operations, and GM profits off drastically.

* Imports, especially the Japanese, taking a bigger and bigger chunk of the US auto market.

That, in sum, is the auto industry picture in the United States today.

In 1979, more than 70 percent of all imported cars sold in the US were built in Japan -- about 1.7 million of them. This year, much to the chagrin of the US auto industry, Japan may displace the US as the world's largest producer of motor vehicles.

What's going on, anyway? Why can't US carmakers compete? Or to put it another way: Why are the imports gobbling up 22 percent of the new-car market -- and rising?

The answer is simple: US carmakers do not now have enough of the small, high- mileage cars that many car buyers want.

Why not?Again, the US auto industry has always made its money in big cars, not subcompacts.

"US carmakers are not cost-competitive with the imports," declares John B. Schnapp of Harbridge House, a Boston- based consulting firm. As a rough rule of thumb, a manufacturer has to build at least 400,000 vehicles of a single "family" in order to achieve maximum economies of scale, he adds. No US subcompact car up to now has been built in these volume levels.

Thus, no US subcompact-car program so far has been able to make money.

The Pinto was never a moneymaker for Ford; neither are the Omni-horizon subcompacts for Chrysler. GM may reach profitability with the Chevette now that it is building the car in two assembly plants and the demand remains high.

Toyota probably produces something like 700,000 to 800,000 vehicles in the Corolla family for both its domestic and export markets. Even GM is never likely to get up to those sorts of figures for the US market and for export.

Clearly, the price of fuel has the full attention of the American car buyer today. Gasoline sells for $1.20 to $1.30 a gallon in most parts of the country and is headed for $1.50 by summer, according to some estimates.

When the new 1980-model cars were introduced last full, Detroit carmakers came out with downsized models. Yes these still are either larger-than-import- size or high-luxury cars which many buyers are snubbing. In addition, the companies are hamstrung by the inability to build or buy more small engines so that they can turn out an even larger number of fuel-efficient lightweight vehicles to meet the market demand.

"The plant and equipment which Detroit has in place cannot turn on a dime," declares Phillip K. Frickle, a market analyst with L. F. Rothschild, Unterberg, Towbin, in New York. "It takes a long time to plan new products and get them into production."

The US auto industry also has had a long run of bad publicity -- Ford Motor Company's negligent-homicide Pinto trial in Indiana; wide-ranging quality problems and so-called secret warranties to buyers with the loudest voices; inadequate rustproofing; Chrysler's hanging-by-the- thumbs financial crisis; higher and higher prices; and 7 million recalled cars in 1979 alone.

Clearly, the market changed faster than even industry-leader General Motors predicted. In 1978, GM couldn't build enough Cadillacs. Now, the industry is trying every tactic in the book, and spending an incredible amount of money in advertising and rebates, just to push the 1979 leftovers and slow-selling 1980 -model cars off the lot.

There is some light down the road, however. Come fall, Detroit will begin phasing in a new phalanx of high-miles-per-gallon cars. But whether they'll stop the importers in their tire tracks remains to be seen.

Both Ford Motor Company and Chrysler, followed by General Motors a year from now, will bring out all-new, front-wheel-drive cars that will vie nose to nose with the imports.

Ford will unveil its Pinto-Bobcat replacement, the front-drive Escort and Mercury Lynx -- a program that cost Ford an estimated $3 billion.

Chrysler leads off its hoped-for new-car revival in the fall with front-wheel replacements for the Dodge Aspen and Plymouth Volare, a half ton lighter and two feet shorter than the cars they succeed. A batch of new cars are on stream for 1982 and beyond if Chrysler wins its fight to stay in the auto business.

Then a year from now GM will introduce its lighter-weight J-car entries to replace the Chevrolet Nova and Pontiac Sunbird.

Higher mileage is the goal. By 1985, GM expects the average inertial weight of its cars to be about 3,100 pounds, down from 3,650 this year.

Looking even farther ahead, the typical US-built car 10 years from now will weigh about 2,500 pounds, be powdered by a 4-cylinder turbocharged diesel engine , and be loaded with electronics, according to a study by Arthur Anderson & Co. It will have four-wheel drive and be about the size of the GM X-cars -- the high-selling, front-drive compacts introduced last April.

This domestic-car onslaught has not been lost on the Japanese, the high flyers of today, who are quick to admit that the race for the buyers' dollar in the mid-1980s will be a lot tougher for them than now.

Obviously, a lot depends on the economy in the months and years ahead. If the economic screws tighten later this year, US carmakers may be in for more bad news. "Once the recession gets rolling, layoffs mount, and consumer incomes get really pressed, we think the auto industry is in for a very rough ride," says A. Gary Shilling & Co. Inc., an economic consulting firm.

The company predicts no more than 10.8 million new-car sales in 1980, including imports, and 8.9 million in 1981.

Meanwhile, the US car industry has to face up to a barrage of import competition, spearheaded by the hard-charging Japanese, who sold some 1.7 million cars in the US last year and indicate little interest in significantly lowering the number in 1980.

Despite Honda's plan to build a car-assembly plant in the US over the next couple of years, neither Toyota nor Nissan (Datsun) has been willing to make any kind of a commitment to such a project in the US.

"We're thinking small now," assures William O. Bourke of Ford Motor Company, "but more than that, we're combining size and weight reduction with high technology that will permit us to preserve 5- and 6-passenger function while delivering excellent fuel economy."

Even so, Mr. Bourke admits that the domestic industry has a long way to go in reducing the size of its cars even more, including the use of lightweight metals. By 1985, says Mr. Bourke, Ford expects to be using about a billion pounds of aluminum a year in North America alone.

Revamping the way the US industry builds cars takes a bundle of cash. To tool for a 500,000-unit transmission takes at least $500 million. To tool for a new engine line can run to $600 million. To tool for a whole new body style, such as the GM X- car compacts, takes at least $1 billion and maybe a lot more.