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How Detroit Helped Give Its Market Away

Transplants increasingly dominate U.S. production.

by on Sep.14, 2009

Detroit dared the Japanese to "build cars where you sell them." Initially reluctant, makers like Honda -- which opened the first Japanese auto "transplant," in Marysville, Ohio, in 1982 - soon embraced the idea.

Detroit dared the Japanese to "build cars where you sell them." Initially reluctant, makers like Honda - which opened the first Japanese auto "transplant," in Marysville, Ohio, in 1982 - soon embraced the idea.

Be careful what you ask for, goes the old axiom, as you just might get it.  Someone should have told that to Harold “Red” Poling, the former Ford Motor Co. Chairman, who liked to taunt the Japanese, back in the early 1980s, to “build them where you sell them.”

Back then, the imports were still a relatively modest, if fast-growing force, and buoyed by a lopsided exchange rate, makers like Toyota and Honda were able to sharply undercut their Big Three foes.  Eliminate the yen from the equation, went the conventional Detroit wisdom, and the imports would lose their competitive edge.

It was an era when the mantra, “Buy American,” still resonated with some buyers, especially when spoken by the likes of Lee Iacocca, the Chrysler chairman and consummate TV pitchman.

Transplant to TheDetroitBureau.com

Transplant to TheDetroitBureau.com

But what really mattered to the Asian makers was the passage of so-called “voluntary” restraints on Japanese automotive imports.  The severe limits initially appeared to provide a real advantage for Detroit, immediately reducing both the sales and share of brands like Toyota.  If there weren’t enough Corollas, import-oriented buyers would have to settle for Ford Escorts and Chevrolet Cavaliers.  Better yet, Detroit could raise its prices – by hundreds of dollars per vehicle, according to research of that era, since it didn’t have to compete so hard.

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