The Golden Age
If they sold some models abroad with great success, Japanese manufacturers were firstly focused on their own domestic market. One cause and consequence was their dealership structure.
Back in the 1950s, Toyota was recovering from the war and thanks to large orders from the US military for the Korean War, was selling a lot of trucks. In 1955, Toyota released the Crown, the first car fully designed and built by Toyota, and their first mass production model. To separate the trucks from the Crown, they opened new dealerships to showcase their new vehicles to a new clientele. If it’s not unheard of for manufacturers to have split dealerships between commercial and passenger vehicles, what’s less heard of is splitting it again when you introduce a new model. But that’s what Toyota started to do.
Dealerships in the Saitama prefecture, showing various chains. Some of these don’t exist anymore.
Spot the differences in these Toyota X80 (Mark II/Cresta/Chaser).
Toyota repeated the process several times to accompany the sale of just one model, sometimes opening new stores, sometimes repurposing old ones. Their lineup was split by vibe and trim level across competing Toyota dealership chains. And this is how you get 50 shades of Japanese mid-sized sedan, Camry or Vista, Chaser, Mark II, or Cresta, cars that you can scarcely tell apart, sometimes just rebadges of each other. And that’s just Toyota.
Mazda, Nissan, Honda and Mitsubishi followed the example. Less strictly than Toyota, but you could still find competing stores, Nissan Blue Stage vs Nissan Red Stage, Mazda vs Eunos, etc. The amount of overlap in the lineup of these competing chains was largely a function of the overall company’s cashflow. Subaru, being a much smaller player, was an exception. For the others, as long as the cash flowed, this was not a problem.
The multiple dealership system was a symptom of the outrageous financial health of Japanese automakers. By the late 80s, they were swimming in cash. The Japanese industry was reaching a peak. Lines were going up. Some manufacturers started to diversify into financial and real estate assets, Toyota even started building homes. Everything was just going great. And the period was fertile for quirky passion projects.
E80 Corolla and friends at the hottest car meet in the world, Osaka’s Daikoku.
Nissan developed the R32 GT-R with a clear intent to dominate Group A touring circuits, and dominate it did, especially in Australia. As it was winning F1 championships with Alain Prost and Ayrton Senna, Honda used their experience to develop the NSX, intended to compete with European supercars, except better, cheaper, and more reliable. Mazda continued its rotary adventure, despite the many problems and inadequacies of the engine, they had found a niche with the RX7, and they were certain their endurance programme would yield big results. Toyota, Subaru and Mitsubishi started to bet big on rallying, eventually eclipsing the once great Lancia. And on the road, they kept pumping affordable sports cars and over-engineered, tuner-friendly engines.
An engine to decimate them all. The 2JZ-GTE, used on the MkIV Supra and S140 and S160 Aristo, is legendarily overbuilt, from 280PS on paper, to preps on stock internals reported up to 700PS.
They were eager to showcase their best engineering, and money was no object. They had the Japanese market on lockdown, and they were already making international moves. When the Japanese government enacted a voluntary export restriction, you might think that would have been a problem, but no, if the volume was to be limited that was only an incentive to bump up the price tag. It was time to show the world Japanese cars weren’t just cheap and reliable, but that they were simply the best.
The wheel of a first generation Acura Legend.
Honda was the first to react. They developed two new vehicles, the Legend and the Integra, sold them as Hondas at home, and in 1986 exported them to the US as Acuras. It was the first of the premium Japanese brands to come to the US, but it would soon be followed. Toyota took more time to execute on the same idea, and for good reason. If Honda was making a premium sedan, Toyota was simply designing the best car in the world, in direct competition with the S-Class and 7-Series. Sold as the Toyota Celsior in Japan, it was known in the US as the Lexus LS400, and it found its public. Nissan with the Infiniti Q45 luxury performance sedan was less successful, but still successful enough to gain a foothold.
And then of course as we all know, Mazda did the same with Amati…
The Lost Decade
Alright, you probably don’t know Amati and that might be because it never existed.
What goes up must come down eventually. The multiple store chains, the top-of-the-line sports cars, the luxury divisions, all of this had a cost. A cost these companies could afford while the economy was going strong. The thing is, all that capital, it wasn’t the Japanese economy going strong, it was a bubble.
The 1990s opened on a small recession in the United States, and on the Japanese asset price bubble popping. Japanese manufacturers had overplayed their hands. The formula of overexpansion, overengineering, overlapping lineups and overreliance on a domestic market that was just about to crash was a recipe for disaster. If people were still buying Civics and Corollas worldwide, sales of premium and sports cars started to falter, especially in the US, which is to say especially where they had invested big yens. And by early 1992, the Japanese economy was entering a decade of stagnation.
Definitely not stonks at all.
When it unfolded, Amati was ready to launch, with models already in production, ad campaigns rolling out, the whole shebang. But with the forecast suddenly looking cloudy, Mazda chose to cancel their plans. They were one of the small ones, not part of a massive keiretsu (a different kind of conglomerate from a zaibatsu, don’t ask) like some of their competitors. They were saved thanks to an existing partnership with Ford. Ford injected cash by increasing their stake, and cleaned up the mess. The period for Mazda meant more platform sharing, more cost rationalisation, a slashing of R&D and motorsport budgets, and of course the end of their premium ambitions.
Nissan didn’t have a Ford to save them. With a lineup even more bloated, expensive halo projects, a myriad of sports cars they had trouble selling, weak exports, and significant investments into finance and real estate that had just blown in their face, Nissan’s exposure to the crisis can only be described as deadly. When the bubble bursted, Nissan flirted with insolvency. Renault looking to expand into Asia swooped in and offered a deal they couldn’t refuse. Nissan went on as part of the Renault-Nissan Alliance, effectively a subsidiary in all but name. It lost a big chunk of its identity, though at least it survived to live another day.
Ad for the Amati 500. If Amati never was, the car still came out under various names: Mazda Xedos 9, Mazda Millenia, and Eunos 800.
Nissan Micra and Renault Clio at the Renault factory in Flins, France, where both cars are assembled. Synergy!
The Lancer, the Impreza and the Celica battled on rally specials during the 1990s. For both Mitsubishi and Subaru, that kind of brand recognition was very helpful. And for Mitsubishi, being part of one of Japan’s biggest conglomerates containing one of Japan’s biggest banks also helped.
On one side of the spectrum, Subaru was too small to be seriously impacted. They had found their own loyal AWD niche and having built a business model on it, they weren’t significantly impacted. On the other side of the spectrum, the Mitsubishi keiretsu tanked the hit because it was still fundamentally a gigantic shipping conglomerate. Though it may have given the impression Mitsubishi Motors was doing better than it really was, in reality, the sales weren’t good. No drastic measure was taken, it would have been relatively unimaginable for the keiretsu to axe one of its companies unceremoniously, especially with rallying glory keeping the Mitsubishi name in the public consciousness. But the 1990s was a decade of slow decline for the car company.
Honda was less bloated and less exposed to the bubble’s effect than its competitors, and they were selling Civics and Accords like hotcakes all over the world. Honda still took cost rationalisation measures to protect itself. The NSX was perhaps the biggest victim on Honda’s side. Plans for continuous improvement were scrapped, and it quickly became unable to compete with evolving Ferraris and Porsches. What started as an honest competitor ended up a decade later laughably inadequate. But that sacrifice was perhaps not in vain. By the end of the decade, Honda was in a strong enough position to celebrate their 50th anniversary with a brand new sports car, the S2000.
Toyota was very much bloated and exposed, but Toyota was also very, very big. The Toyota Production System proved extremely important in cutting down costs when it mattered, and with the sales of the Corolla and Camry it had the meat to take the shock. But there would be no elfing around from there on. The Supra and MR2 were axed, Toyota became the more serious, rational, conservative company we know today. For them it was perhaps a blessing in disguise, this restructuring allowed them to rise up as the top manufacturer in the world, capable of doubling down on hybrids despite the costly and massive flop of the first generation Prius.
1995 Honda SSM concept, which became the S2000. Honda did fine in the 90s.
1996 Toyota Prius concept. The first generation was originally only sold in Japan, and as a premium vehicle to cover the high manufacturing costs of the hybrid system. It didn’t sell very well, and it wasn’t profitable.
I wonder if you know
Although the shock of the Lost Decade immediately following the late 80s golden age didn’t kill Japanese sports cars, it definitely put a damper on all the craziness. There was a sense that this wouldn’t happen again, that there would never be another Supra, another NSX, another GT-R. It was fertile ground for nostalgia.
Japanese pop culture had depicted racing almost as soon as it began. Mach GoGoGo, also known as Speed Racer, came out in 1966. In the height of the golden age, Shakotan Boogie and Wangan Midnight told stories around two different street racing scenes. Initial D wasn’t necessarily novel when it came out. Except for one thing. It came out in 1995. It prominently featured late 80s/early 90s Japanese sports cars, and a street scene in severe decline after government intervention. It wasn’t a witness of its era like its predecessors. Initial D was perhaps the first media franchise to mythologised this bygone era, a pure nostalgia trip to the glory of a lost Golden Age.
If it took some years for the manga to cross over to Europe and the US, something else brought that nostalgia to the western youth. For a generation of people, the release (and massive success) of Gran Turismo in 1997 was the first point of contact with a lot of these cars that had never made it out of Japan. Even if import scenes existed outside, they remained fairly confidential, with most JDM cars banned in the US and not imported in Europe. The scene was slowly coming into public consciousness in the West, until it reached critical mass with 2001’s The Fast and the Furious.
Cover of the first issue of Initial D, with the AE86 Sprinter/Corolla in the background.
Japanese cover of Gran Turismo.
Shibuya Crossing depicted in Tokyo Drift. The film uses movie magic to mix real cars in fake Tokyo filmed in Los Angeles, and fake cars in real Tokyo filmed without permit on location.
The cultural impact of these franchises gave Japanese manufacturers a signal that they still had a market waiting for them. A new generation of sports cars arose, the S2000 perhaps the first one, followed by the RX8, the 350Z, new Evos and WRXs, and the final boss of Japanese sports cars, the R35 GT-R. Then came the 2008 subprime mortgage crisis.
Though the causes, starting positions and effects were different from the 1990s crisis, the consequences were largely the same. Subaru weathered the storm in its niche. Mazda and Nissan swapped their 90s fates, with Nissan surviving thanks to its partnership with Renault and more restructuring, and Mazda nearly disappearing. Mitsubishi further dwindled away, and eventually rejoined the Renault Nissan Alliance. Honda stood on their solid foundations, while Toyota absorbed the hit with the sheer mass of the company.
Nissan GT-R Proto at the 2005 Tokyo Motor Show.
Mom: “We have Mitsubishi Eclipse at home” - Mitsubishi Eclipse at home:
Cutaways of the plug-hin hybrid system of a 4th generation Prius. If the 1st gen was unprofitable, it laid the foundation of the massive success of the Prius starting with the 2nd generation, and Toyota’s dominance on the hybrid market.
By the 2010s, Japan could be argued to be the leading nation of automobile, in sales, in innovation, in pop culture. Toyota’s bet on hybrid proved to be a huge success, and rather than cashing in the the carbon credit that came with it, they eventually used it to offset new passion projects, renewing with the golden days of Japanese sports car by developing the 86 with Subaru, the Supra with BMW, and the GR Yaris and Corolla with themselves. Toyota is also one of three manufacturers engaged in WRC, has had continuous engagement in Nascar and endurance series, and is even dipping toes into Formula One.
While this is sure to please enthusiasts, there is one tiny blindsport in that strategy, and it’s a blindspot shared across Japanese manufacturers: the world is moving towards electrification. Manufacturers like Renault and Volkswagen started a hard pivot after the dieselgate scandal that tarnished their bread and butter, while China has launched a massive offensive on the global stage, leveraging their industrial capacity in high-tech manufacturing. The competition also comes from South Korea, with Hyundai-Kia having already built a reputation of cheap, reliable cars, moving into the premium segment with Genesis, an almost play-by-play repetition of the Japanese strategy of yore, except they too made significant investments in EV.
Hyundai Inster and BYD Seagull. Hyundai and BYD are relatively new challengers, and already ahead of Honda in sales.
Japan, by and large, is lagging behind. The Japanese auto industry rose from virtually nothing after 1945 and came to challenge the old automotive world order with great success. Today, they, and perhaps more specifically Toyota and to a lesser extent Honda, are the old automotive world order in a prime position to be taken down. But the future isn’t written. If the competition is nipping at their heels, they survived existential crises before. Only time will tell who will be king of the hill when the dust settles.