Not all the distributors were as happy, however, as they seemed. The Carina E has had excellent reviews - but the dealers are being asked to sell an awful lot of them into worryingly stagnant markets. The car will be pitched head-on against the Nissan Primera and the Honda Accord, both made in Britain, as well as potentially tough European competitors such Ford's Sierra replacement, the Mondeo. It is not surprising that some of the dealers were shocked when told their sales targets.
If there were worries at Burnaston, they were nothing compared with those in London, where Ford of Europe's top executives spent Wednesday telling the world about their plans to cut 10,000 jobs, including 2,500 in Britain, by the end of 1993. Or in Frankfurt, where Dieter Ullsperger, the Volkswagen finance director, announced the group had slipped into loss. He forecast the German car market would shrink by a fifth next year and that VW would introduce short-time working; the industry is expecting more radical pruning plans soon.
Toyota's Burnaston factory is the biggest manufacturing investment ever made by a foreign company in Britain. Shoichiro Toyoda, the company's chairman, said that when it was running at its full capacity of 200,000 cars a year, it would help the UK's trade balance by between pounds 400m and pounds 500m. Its opening follows those of the Honda plant in Swindon, where the first Accord rolled off the line in October, and of Nissan's Sunderland plant, which has been running since 1986 and has produced 180,000 cars, mainly Primeras, this year.
This is very good news for the British economy. According to DRI-McGraw Hill, UK car production will rise from 1.2 million this year to 2 million in 1997, by which time the automotive trade balance should be firmly in the black.
The Japanese factories will have beneficial effects beyond their direct impact. They have attracted investment from parts makers and have encouraged other manufacturers to look at Britain as a base. General Motors, which shunned the UK in the Eighties, has boosted its Vauxhall production at Luton and has opened an engine plant on Merseyside.
It would be reasonable to assume that there is a downside to the story - that there is a link between the build-up of Japanese production in Britain and the slimming-down of two established European manufacturers. There is, but not a straightforward one. The Japanese, who will supply about 200,000 cars out of the 13 million made in Europe this year, have had no great impact so far. The immediate troubles besetting the home car makers come more than anything from the recession.
But in the long run, the Japanese factories will send shockwaves through the industry. By 1999, they will be making between 1.2 million and 1.7 million cars. Total European production is expected to be about 14.6 million, so their share will be between 8 and 11 per cent. Add another 1.2 million of direct imports from Japan, and the Japanese could have 20 per cent of the market - double their current share.
The competitive pressure will build steadily through the Nineties. Some doomsayers predict that one of the big six - Ford, General Motors, Fiat, Volkswagen, Renault and Peugeot-Citroen - will be forced out of production. Most observers say the politicians will not let this happen, but that there must be massive rationalisation.
This assumes of course that the Japanese build-up is relentlessly successful. There must be worries in Tokyo, as well as in the dealer network, that it will not be. When Nissan started production in Sunderland in 1986, it was making the undistinguished Bluebird and sold it sufficiently cheaply into a booming market to make a success of it. The more sophisticated Primera and Micra have since taken up the running. But times have changed: Nissan is under financial strain, and the car market is weak. It is unlikely a manufacturer could get away with producing a less-than-excellent model now.
Toyota is one of the richest companies in the world, yet last Wednesday Dr Toyoda was careful to dampen expectations that European capacity could be increased. It is also possible that companies that were intending to set up in Europe, such as Mazda, will change their minds.
But there is a reason why the Europeans should be terrified of the Japanese: their ability to produce superb quality cheaply. By the late Nineties, the Toyota, Nissan and Honda factories in Britain will be making about 600,000 cars with 10,000 workers. This year, Ford will produce 447,000 vehicles with about 35,000 workers. Even allowing for Ford's extensive headquarters, design and development staff in Britain, the productivity gap is gaping. That means that the Japanese have a marketing edge. 'They will offer a car with a higher specification for the same price,' says Garel Rhys, motor industry professor at Cardiff Business School.
Ford recognises this, and has done for many years. In 1981, its British arm tried to introduce the AJ - After Japan - programme in an attempt to jack up miserable productivity. It started quality circles and tried to make its workforce more flexible. The scheme collapsed under union opposition. Since then, it has been introducing more efficient practices, but at a painfully slow rate. The last big strike in Britain was at Ford in 1990; the issue was an attempt to change working practices.
It is no coincidence that Ford has announced sweeping cuts in the depths of a recession. Its European operations lost pounds 685m in 1991, having been consistently profitable throughout the Eighties, and so has given the company a credible stick with which to beat its workforce. Despite threats from the British unions, a strike is unlikely.
Volkswagen wants to increase its productivity, which it admits is below the Japanese standard, and is aggravated by the highest wage costs in Europe. The buoyancy of the German market - last year a record, this year only slightly lower - has meant that VW has had neither the time nor the need to get to grips with the problem. Now it can and must. Not only is the home market shrinking, it has been hit hard by the realignment in the ERM. 'We lost a lot of money because we couldn't put up prices in the countries that devalued,' says Ortwin Witzel, a spokesman.
Up to now, VW has concentrated on spreading production abroad. It owns Seat in Spain, where Polos are made, as well as Skoda in Czechoslovakia. It is also starting a joint venture with Ford in Portugal. Now it is turning its attention to its home costs - but it is likely to find the struggle at least as great as Ford's. The German system of industrial relations is inflexible, and despite a highly trained workforce, VW will find it difficult to bring its elderly Wolfsburg plant up to scratch.
Ford and Volkswagen are both taking advantage of the recession to prepare themselves for the big fight. DRI-McGraw Hill believes there is a lot more cutting to come. 'There are 1.43 million people employed by European car assemblers,' says the consultancy's John Lawson. 'That figure looks to come down by at least 25 per cent over the rest of the decade.'
The real worries surround the companies that have yet to come to grips with the Japanese challenge. The most vulnerable are those that have been reliant on protected home markets. Fiat has seen its share of its home market fall from 70 per cent to 50 per cent, even though Japanese imports are minimal. Its range is elderly and will not be revitalised until 1995. With the Italian market likely to fall by up to 10 per cent next year, Fiat faces a grim couple of years.
Renault and Peugeot-Citroen have also been protected against the Japanese, whose imports are restricted to 3 per cent of the French market. They are both showing, however, that a good range of cars can cut through a recession. Peugeot's ever-popular 205 still rules the small-car roost, while Renault has staged a remarkable revival with a number of highly acclaimed new models.
General Motors has also been on a high with a strong range. But none of these companies can count on keeping the edge. Ford may be in trouble at the moment, largely because its new Escort has been a disappointment and the Sierra is getting elderly - but if the Mondeo is a success, it could suddenly pull forward again.
Some companies still hold out hopes that the battle can be won in Brussels. Japanese sales have long been restricted in some European markets, including Britain. To prepare for the Single Market, the accord was renegotiated last year, and quotas will be phased out by 1999. The British fought to have UK-built cars excluded from the quotas, and they won. But not everyone accepts the agreement. Jacques Calvet, the head of Peugeot, who is an implacable opponent of Japanese factories in Europe, is still keen to undermine it.'
Even Volkswagen, previously a champion of free trade, has changed its tune. 'There should be a restriction on the total volume the Japanese can sell in Europe,' Mr Witzel says. 'This should probably include UK- built cars.' As the British will defend their factories tooth and claw, further conflict is inevitable if the French or Germans try to change the terms of the agreement.
In the meantime, Europe's car makers will be trying to bring their costs down to Japanese levels. Prof Rhys believes there is a solution to looming overcapacity. 'The problem is the failure of the top six companies to export enough outside Europe,' he says. 'Why aren't they in the US, where the Japanese sell 2 million to 3 million cars?'
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