Bluebirds on Wheels

From a standing start less than 15 years ago, postwar Japan has squeezed into international traffic and passed many flashier rivals to become the world's fourth largest automaker. Last year Japanese production rose 26%, to 1,700,000 cars and trucks, ranking Japan after the U.S., West Germany and Britain, and this year the total is expected to hit 2,000,000.

The trouble is that too many Japanese auto companies--14 in all--are struggling for a share of this market. Plagued by Japan's current recession and bothered by the threat of competition from foreign cars, the Japanese auto industry is finally beginning the consolidation that it has long resisted. Last week Nissan Motor Co., the country's second-ranking automaker, and Prince Motors, Ltd., its fourth-ranking, announced plans' to merge into what will become Japan's biggest auto manufacturer.

Government Matchmaker. The Nissan-Prince merger, to be completed next year, will join two companies whose combined monthly production of 49,000 autos accounts for 36% of Japan's total compared with the 32% of Toyota, the present leader. The deal is not only Japan's first major auto merger, but the first of what Nissan hopes will be a series of acquisitions along the lines of General Motors in its formative years.

Says Katsuji Kawamata, 60, Nissan's president: "I made up my mind strictly from the viewpoint of making our industry stronger in international competition." Far from frowning on bigness, the government served as the matchmaker, is encouraging other mergers.

Japanese automakers, long secure behind high tariff walls, are bracing for a possible wave of competition from abroad after the country's import quotas are lifted later this year; this will be the first step toward lowering the restrictive 35%-40% duties on foreign cars. Under present tariffs and taxes, for example, a Volkswagen that sells for $1,250 in Germany is marked up to $2,600 in Japan. When tariffs drop, the increased competition could be rough.

Japanese cars range from three-wheel $650 midget cars and the $1,020 beetle-shaped Carol 360, made by Toyo Kogyo, to Nissan's squat, six-passenger, $3,750 Cedric, named after a character in the novel Little Lord Fauntleroy. The bestseller: Nissan's $1,566 Bluebird, named for "the bluebird of happiness" m the Maurice Maeterlinck play. Though these cars are rugged, functional and economical, they cannot compete in styling and roominess with most U.S. and European makes, which will be nearer to the Japanese prices when the tariffs are reduced.

Eye on Volkswagen. To ensure markets for its output, the Japanese auto industry is selling hard overseas, particularly in Southeast Asia. Last year Japan's auto exports rose 53%, to 150,000 cars and trucks. Hustling Japanese automakers have established assembly plants in India, Thailand, Taiwan, and the Philippines, as well as in South Africa and Latin America. By this fall, the Japanese will be shipping cars to the U.S. and Canada aboard specially constructed auto freighters designed to carry 1,200 cars a trip. Japan sold only 12,000 cars in the U.S. in 1964, but has its sights set on a 30% increase this year. Nissan's Bluebird, the top Japanese seller in the J.S., is priced at $1,696 to appeal to Volkswagen-size pocketbooks.

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