Dipping dollar sends Japan's carmakers to US factories for help. `Captive imports,' other tricks could protect light-truck market

The weak dollar has made it more and more difficult to compete in the light-truck market in the United States, so Mazda Motors Corporation would like some help from its US affiliate, the Ford Motor Company. The two carmakers are discussing the possibility of having Ford provide trucks to Mazda for sale by the Asian automaker's US dealers. That is just one of many steps the Japanese are taking as they rethink their strategy for the US new car market in light of the continuing decline of the dollar.

For a few decades, American carmakers have marketed ``captive imports,'' products carrying domestic nameplates but built in Japan by their Asian affiliates. (Mitsubishi, for example, supplies a broad range of vehicles to the Chrysler Corporation, while a Korean company, KIA, makes the Festiva for Ford.) This would be the first time a Japanese automaker would be on the receiving end.

Over the past three years, the Japanese yen has doubled in value against the American dollar. Cost-cutting programs in Japan have helped ease the impact, but Japanese automakers have found American consumers increasingly resistant to picking up the rest of the tab in the form of price increases averaging more than 10 percent a year.

Last year, sales by several Japanese automakers fell short of those allowed under so-called ``voluntary'' import quotas - the first time that has happened this decade - and volume is likely to decline even further this year. The biggest impact has been felt in the price-sensitive light-truck market, where the Japanese face not only a currency shift but also a 25 percent import tariff.

Until recently, this market segment was dominated by the Japanese. But in the first six months of this year, import light-truck sales plunged 23 percent compared with year-earlier levels, and analysts say the gap will widen this year, largely because of rising Japanese prices.

``If a Japanese company wants to continue selling pickups and other light trucks in the US market, you almost have to look at sources other than Japan,'' says Richard Recchia, head of Mitsubishi Motors' US sales subsidiary.

Mitsubishi has already turned to South Korea for a new line of entry-level automobiles, dubbed the Precis, one of several options it could take in order to go head to head with the increasingly competitive low end of the American new car market.

Mazda Motors also plans to seek outside help, but it is examining an unusual and possibly precedent-setting approach to its truck problems.

Though he says there are still ``no concrete plans,'' Mazda president Norimata Furuta says his company would like Ford to supply it with light trucks which would be sold in the US.

When the first Japanese automakers announced plans to build assembly lines in the US, they were acting primarily out of political concerns, threatened with trade retaliation if they did not move to build some of their products in their No. 1 foreign market.

More recently, however, Japanese carmakers have begun to see American factories as a way to soften the blow of shifting exchange rates. At current levels, production costs in the two countries are nearly comparable.

``When the yen hits 115 [to the US dollar], it will make sense to cease exporting from Japanese plants and switch to building here,'' says Ronald Glantz, an auto analyst with Montgomery Securities in San Francisco, who also has extensive experience in currency markets.

Even though the dollar has regained some strength recently and stands at 133 yen, industry experts unanimously agree that trend is a temporary one. Ultimately, Mr. Glantz believes, the dollar could dip to the 90-yen level.

Right now, all but one of the Japanese carmakers are either operating a North American assembly plant (several are in Canada), or are putting one up. At the moment, these transplants have the capacity to build 1.15 million cars and trucks a year. By 1993, that capacity will double to 2.39 million vehicles, according to the automotive research firm Autofacts Inc.

And William Pochiluk, Autofacts' chief analyst, says that the number ``could exceed 3 million'' if the yen continues gaining strength.

Several Japanese carmakers have already begun to suggest that further expansions are in line. Honda officials hint they could boost production at their second US line as high as 360,000 units a year, more than double the current plan for the plant being constructed.

Industry insiders consider it likely that Mazda, Nissan, and Toyota will also boost capacity over current plans.

At the same time, the Japanese transplants are also increasing their local content, or the use of American-made components. ``We want to achieve 70 to 75 percent local content by 1990,'' Mazda's Mr. Furuta says.

The company should decide within the next year whether to build an American engine plant. The other option would be to turn to a US supplier.

That increase in local content will not bring as much of a boom for American auto-parts suppliers as it might first seem, however.

Increasing numbers of Japanese component manufacturers are also setting up operations in this country, and they are expected to capture a disproportionate share of the business from transplant assembly lines.