Daihatsu Motor Company, Ltd.

views updated May 21 2018

Daihatsu Motor Company, Ltd.

1-1, Daihatsu-cho, Ikeda-shi
Osaka 563
Japan
+81 727 518811
Fax: +81 727 536880

Public Company
Incorporated:
1951
Sales: ¥793.5 trillion (US$7.4 billion) (1996)
Employees: 11,415
Stock Exchanges: Tokyo
SICs: 3711 Motor Vehicles & Car Bodies; 3713 Truck & Bus Bodies; 3714 Motor Vehicle Parts & Accessories; 3799 Transportation Equipment, Not Elsewhere Classified; 5010 Motor VehiclesParts & Supplies

Daihatsu Motor Company, Ltd. is one of the worlds leading producers of microcars, with models sold in more than 120 countries around the world. Daihatsus line of small passenger cars, trucks, and utility vehicles ranks it among Japans top ten car manufacturers. One of Japans oldest automakers, the company pioneered its key market segment, producing the worlds first one-liter diesel engine. Daihatsu was also first to realize in the postwar era the need for three- and four-wheel small delivery vehicles; as a result, in the 1950s the company introduced its extremely successful Midget minivehicle (marketed in the United States as the Trimobile). By virtue of its 33.4 percent holding in the company, Toyota Motor Corporation held veto power over Daihatsu; about one-fourth of the latters production is manufactured for sale under the Toyota nameplate. Despite its 1992 exit from the U.S. market, the company remained a tenacious international competitor in the small vehicle and electric car markets. In the wake of its pull-out, Daihatsu returned its focus to cutting-edge technologies like electric cars as well as emerging auto markets in Southeast Asia, particularly China.

Early Twentieth-Century Origins

Daihatsu Motor Company began as the Hatsudoki Seizo Company, Ltd., established in Osaka in 1907 by a team of professors from Osaka University whose project it was to advance Japans domestic motor vehicle industry. That year there was little demand for the six horse power automobile built by the Hatsudoki Seizo Company. After the First World War, when the importance of automotive vehicles in modern warfare was established, domestic vehicle production was encouraged. During this time Hatsudoki Seizo focused its production on trucks for the military, motorcycles, and small three-wheeled vehicles that could easily negotiate Japans narrow streets and alleyways.

Despite encouragement from the military, resulting in large purchase orders for domestic motor vehicles, passenger cars were considered too risky an investment for Japans big manufacturers. Lacking a sophisticated machine tool infrastructure, Japan produced only 1,000 passenger cars in 1929, while it imported nearly 15,000, primarily from the United States. This foreign monopoly of the Japanese automobile market ended with the military takeover of the Japanese government in the mid-1930s. The Automotive Manufacturing Industries Law was enacted in 1935, providing tax incentives and other benefits to producers of domestic motor vehicles. Still, neither the Hatsudoki Seizo Company nor other automotive businesses in Japan were willing to risk investing in passenger cars, but continued instead to focus on wartime needs, especially medium-sized military trucks and weaponry.

In 1930 Hatsudoki Seizo became the first Japanese automotive business to produce a three-wheeled vehicle with a domestically manufactured engine. Seven years later they introduced the first mini four wheeler. As a result of its reputation as a machinery and small vehicle manufacturer, Hatsudoki Seizo was increasingly relied upon by the military, and the company began to expand; the first major plant opened in Ikeda in 1939.

Post World War II Growth

After World War II, with Japanese industrial facilities destroyed and the country occupied by the allied military powers, Japanese manufacturers were encouraged to rebuild and resume production of motor vehicles, especially trucks and urban transportation vehicles. However, as in prewar days, the import of foreign automobiles resumed. The first real stimulus to the domestic automobile industry as well as to Hatsudoki Seizowhich adopted the name Daihatsu Motor Company, Ltd. in 1951 was the outbreak of the Korean War. Japanese industry recovered as huge purchase orders were received from the allied occupation government.

In the 1950s Japanese automakers entered into technical agreements with European manufacturers in order to improve passenger car technology. The Japanese government, no longer pressured by military demands as in prewar days, stepped in to support and protect the domestic auto industry, especially by imposing restrictions on imported vehicles.

Benefiting most from these incentives were companies well experienced in the manufacture of motor vehicles and machinery, particularly Daihatsu and its chief competitor, Suzuki. In the mid-1950s, a thoroughly modern market research study of consumer needs, undertaken by Daihatsu, indicated a widespread desire for a high-quality, lightweight, three-wheel truck; in 1957, Daihatsu marketed the Midget mini vehicle. In that year alone, over 80,000 Midgets were sold in Japan. The golden years of the minivehicle and small passenger car had arrived.

The Midget was marketed as the Trimobile in the United States in 1959, and its phenomenal success at home and abroad enabled Daihatsu to expand and market new products, such as the lightweight four-wheel truck Hijet in 1961, followed two years later by the four-wheel Compagno Van. In February 1964, Daihatsu introduced a small, four-wheel passenger car, the Compagno Berlina.

Consolidation of Japanese Auto Industry in 1960s

In the mid-1960s, the Japanese auto industry underwent a major transformation. Mergers took place among the major motor vehicle manufacturers, and Toyota embarked on a joint venture with Daihatsu and Hino, while Nissan merged with other Japanese auto firms. Together, these two main auto-producing groups controlled over 60 percent of the Japanese car market. Pooling resources in this way enabled Daihatsu to expand further into the small vehicle market, increasingly gearing itself to exports. Over 50 percent of Japanese car production after 1968 would be for the international market.

The 1960s and 1970s marked the heyday of the minivehicle and small passenger cars, which were affordable and therefore popular among the middle and working class. Daihatsu produced several small passenger car models, including the Fellow in 1966, the Charmant in 1974, and the highly popular and acclaimed Charade in 1977, which won the Car of the Year Award in 1978 and other prizes in following years. In 1980, the highly successful minivehicle Mire was introduced. Daihatsus small car and minivehicle production passed the ten million mark in 1985.

European and Asian exports remained Daihatsus lifeline through the 1980s. In 1979, a European branch office was established in Belgium, and in 1984, production and sales of Daihatsu vehicles began in Taiwan as well as limited production on mainland China. There are Daihatsu sales offices in Australia, Indonesia, Malaysia and Hong Kong. For the sake of greater efficiency, Indonesia became the main parts supplier for Daihatsu in the all-important southeast Asian market. With the production of the locally built Mira mini pickup in Thailand, sales picked up in that country 50 percent in 1990, and with the fall of communism in eastern Europe and the unification of Germany, Daihatsu established offices in Poland and a branch in Germany, Daihatsu Deutschland GmbH. Also, a joint venture was concluded with Piaggio of Italy to produce and market vehicles like the Hijet pickups and vans. Having expanded its reach to more than 100 countries worldwide, Daihatsu set its sights on the United States in the late 1980s.

U.S. Launch in the Late 1980s

By the 1980s, the big three auto manufacturers in the United States had become as vulnerable to Japanese competition as Japanese automakers had been to American competitors fifty years earlier. Hoping to penetrate the U.S. market for fuel-efficient, yet well-built small cars, Daihatsu opened a new branch, Daihatsu America, Inc., headquartered in California, in 1986. The company opened with its well-established Charade three-door hatchback and a pint-sized sport utility vehicle dubbed the Rocky. At prices as low as half the average new car, the company offered what it called small cars to be proud of, featuring air conditioning and compact disk players.

Despite its long experience in the auto industry and its success elsewhere in the world, Daihatsu seemed destined to fail in the United States. Since it was the ninth and last Japanese manufacturer to enter the market, its imports were limited to less than 12,000 units under Japans voluntary quota system. Furthermore, unlike other Japanese auto companies, Daihatsu delayed establishing assembly plants in the United States. Daihatsus already limited line was held up further when the company became entangled in a dispute with the producers of the Rocky films over the Rocky sport utility vehicle. With its exports restricted and without production facilities in the country, Daihatsus foothold seemed tenuous. Added to these factors were: intense competition in the small vehicle market, a simultaneous decline in demand due to low fuel costs, an early 1990s recession, and the enactment of costly new safety and emissions regulations. But out of all these concerns C.R. (Dick) Brown, head of Daihatsu America, told David C. Smith of Wards Auto World that our number one problem is brand awareness. In fact, the company was dubbed Daihats-who by some industry insiders. This in spite of the fact that in 1992, J.D. Power & Associates, the leading market researcher of the automotive industry, rated Daihatsu first in terms of customer satisfaction after two to three years of ownership. So, having suffered a US$14 million loss in 1992, Daihatsu pulled out of the U.S. market and brought in a new president, Takashi Toyozumi.

Focus On Growing Markets, New Technologies in 1990s

After its exit from the American market, Daihatsu shifted to two primary strategies: development of new automotive technologies and penetration of emerging markets. Ongoing concern with global environmental standards boded well for the companys future. Striving to meet the stringent environmental controls of most developed countries, Daihatsu discontinued using harmful chlorofluorocarbons in its air conditioning systems and in the cleaning of its parts, and it continued its intensive research and development efforts on what it considered the automobile of the future, the electric car.

The companys research and development team had begun designing a silent, high-quality electric car as early as 1965 and unveiled a prototype electric car in 1966. Four years later, Japans Ministry of International Trade and Industry commissioned Daihatsu to produce nearly 300 electric buses to drive visitors about Japans first International Exposition in Osaka, where the vehicles ran without any problems over a period of six months. Since then, the number of electric vehicles in Japan has grown steadily. Daihatsu supplied electric golf carts, newspaper and milk delivery vehicles, and security patrol cars, while the Ministry of Construction successfully employed Daihatsu Rugger electric vehicles that could run on an eight-hour charge.

Daihatsu remained concerned with developing a low-cost electric vehicle for the 21st century. While some analysts were critical of Daihatsus, or any automobile firms, ability to bring down the prohibitive cost of electric cars, most acknowledged Daihatsus leadership role in the development of the electric vehicle and pointed to the fact that unlike most automotive companies, Daihatsu has gone well beyond the planning and design stage: it already had working models. In 1977, at Chicagos International Electric Vehicle Expo, Daihatsu unveiled its electric Hijet model as well as its electric three wheeler. While sales of electric vehicles remained low, in 1988 Japans Environment Agency developed a long-range plan to encourage their research and development.

But perhaps more important than its electric car developments were Daihatsus major strides in emerging markets in Southeast Asia, especially China, which was forecast to generate half the global auto industrys growth through 2005. Daihatsus strengths fit well with the Communist countrys goal of doubling auto production to three million units from 1994 to the year 2000. It offered compact, yet very affordable cars that embraced leading-edge technology and luxury features. Daihatsu started its joint venture with Chinas Tianjin Automobile Industry Group in the mid-1980s, and the new company grew to become one of the nations largest carmakers by the end of 1996. Some analysts even speculated that the reason Toyota paid US$325 million to double its holding in Daihatsu in 1995 was to get a piece of the affiliates Chinese action. Daihatsu also formed joint ventures with national automakers in Malaysia and Vietnam. While overseas markets would clearly play a vital role in Daihatsus growth in the mid-1990s and beyond, domestic sales continued to contribute nearly 86 percent of company revenues in 1996.

Principal Subsidiaries

Daihatsu Auto Body Co., Ltd.; Daihatsu Metal Industry Co., Ltd.; Daihatsu Transportation Co., Ltd.; Daihatsu Credit Co., Ltd.; Daihatsu Estate Co., Ltd.; Daihatsu America, Inc.; Daihatsu Deutschland G.m.b.H.

Further Reading

Bréese, Kristine Stiven, Daihatsu Throws in the Towel in U.S., Automotive News, February 17, 1992, pp. 1-2.

, Restless Understudy, Automotive News, April 8, 1991, pp. 3-4.

Car Maker Calls It Quits in U.S., ADWEEKEastern Edition, February 17, 1992, p. 3.

Chappell, Lindsay, Catch-22: Japans Export Restrictions Hinder Daihatsus Growth in U.S., Automotive News, March 19, 1990.

Daihatsu, Automotive Engineering, February 1996, pp. 135-36.

Daihatsu Names New President, Automotive News, June 8, 1992, p. 1.

Elliot, Stuart, Daihatsu Move, The New York Times, February 18, 1992.

High Octane Relationships, Business Korea, November 1991.

Hinsberg, Pat, Tiny Daihatsu Says: We Try Harder, ADWEEK Western Advertising News, November 5, 1990, p. 60.

Hiromoto, Toshiro, Another Hidden EdgeJapanese Management Accounting, Harvard Business Review, July/August 1988.

Horton, Cleveland, Daihatsu: Small, Proud of It, Advertising Age, Novembers, 1990, p.24.

Knee, Richard, Daihatsu Gets Piece of the Pie, (Car Shipment via Ships and Trucks), American Shipper, January 1988.

Maskery, Mary Ann, Daihatsu Posts $14 Million Loss, Automotive News, November 23, 1992, p. 2.

Muller, Joann, World Competes for Rights to Make Chinas First Affordable Card, Knight-Ridder/Tribune Business News, November 6, 1994, p. 11060020.

ODell, John, Daihatsu Quits U.S. Market; Although Offering Quality, the Company Failed to Woo Many American Customers, Los Angeles Times, February 14, 1992.

, Daihatsus Little Struggle to Succeed, Los Angeles Times, February 10, 1991.

Profit More than Doubled for Japanese Auto Maker, The Wall Street Journal, November 15, 1996, p. B18.

Smith, David C. Is It a Car Or a Fish Dish? Wards Auto World, June 1990, p. 76.

Snyder, Jesse, Daihatsu Seeks North American Tie, Automotive News, August 17, 1987.

Stark, Harry A., No Riddle Here: Charade Aims at Specific U.S. Market Niche, Wards Auto World, November 1987.

Tiny Daihatsu Says Bye-Bye To U.S., Wards Auto World, March 1992, p.9.

Treece, James B. Toyota Takes Helm at Daihatsu, Gains Link to China, Automotive News, September 25, 1995, p.8.

Sina Dubovoj

updated by April Dougal Gasbarre

Daihatsu Motor Company, Ltd.

views updated May 21 2018

Daihatsu Motor Company, Ltd.

1-1, Daihatsu-cho, Ikeda-shi
Osaka 563
Japan
(0727) 51-8811

Public Company
Incorporated:
1951
Sales: 787,502 yen (1991)
Employees: 11,328
Stock Exchanges: Tokyo
SICs: 3711 Motor Vehicles & Car Bodies; 3713 Truck & Bus Bodies; 3714 Motor Vehicle Parts & Accessories

A world leader in the manufacture and sale of high-quality minivehicles, small passenger cars, trucks, and utility vehicles, Daihatsu Motor Company, Ltd. is also a pioneer in the development of the electric car. Daihatsu was the first automobile company in the world to produce a one liter diesel engine, and the first to realize in the postwar era the need for three- and four-wheel small delivery vehicles; as a result, in the 1950s the company introduced its extremely successful Midget mini-vehicle (marketed in the United States as the Trimobile). Despite recent recessionary times, which have forced Daihatsu to close down its American operations, the company is still a highly successful competitor internationally in the small vehicle and electric car markets. In 1992, J.D. Power & Associates, the leading market researcher of the automotive industry, rated Daihatsu first in terms of customer satisfaction after two to three years of ownership.

Daihatsu Motor Company began as the Hatsudoki Seizo Company, Ltd., established in Osaka in 1907 by a team of professors from Osaka University whose project it was to advance Japans domestic motor vehicle industry. That year there was little demand for the six horse power automobile built by the Hatsudoki Seizo Company. After the First World War, when the importance of automotive vehicles in modern warfare was established, domestic vehicle production was encouraged. During this time Hatsudoki Seizo focused its production on trucks for the military, motorcycles, and small three-wheeled vehicles that could easily negotiate Japans narrow streets and alleyways.

Despite encouragement from the military, resulting in large purchase orders for domestic motor vehicles, passenger cars were considered too risky an investment for Japans big manufacturers. Lacking a sophisticated machine tool infrastructure, Japan produced only 1,000 passenger cars in 1929, while it imported nearly 15,000, primarily from the United States. This foreign monopoly of the Japanese automobile market ended with the military takeover of the Japanese government in the mid-1930s. The Automotive Manufacturing Industries Law was enacted in 1935, providing tax incentives and other benefits to producers of domestic motor vehicles. Still, neither the Hatsudoki Seizo Company nor other automotive businesses in Japan were willing to risk investing in passenger cars, but continued instead to focus on wartime needs, especially medium-sized military trucks and weaponry.

In 1930 Hatsudoki Seizo became the first Japanese automotive business to produce a three-wheeled vehicle with a domestically manufactured engine. Seven years later they introduced the first mini four wheeler. As a result of its reputation as a machinery and small vehicle manufacturer, Hatsudoki Seizo was increasingly relied upon by the military, and the company began to expand; the first major plant opened in Ikeda in 1939.

After World War II, with Japanese industrial facilities destroyed and the country occupied by the allied military powers, Japanese manufacturers were encouraged to rebuild and resume production of motor vehicles, especially trucks and urban transportation vehicles. However, as in prewar days, the import of foreign automobiles resumed. The first real stimulus to the domestic automobile industry as well as to Hatsudoki Seizowhich adopted the name Daihatsu Motor Company, Ltd. in 1951was the outbreak of the Korean War. Japanese industry recovered as huge purchase orders were received from the allied occupation government.

In the 1950s Japanese automakers entered into technical agreements with European manufacturers in order to improve passenger car technology. The Japanese government, no longer pressured by military demands as in prewar days, stepped in to support and protect the domestic auto industry, especially by imposing restrictions on imported vehicles.

Benefiting most from these incentives were companies well experienced in the manufacture of motor vehicles and machinery, particularly Daihatsu and its chief competitor, Suzuki. In the mid 1950s, a thoroughly modern market research study of consumer needs, undertaken by Daihatsu, indicated a widespread desire for a high-quality, lightweight, three-wheel truck; in 1957, Daihatsu marketed the Midget minivehicle. In that year alone, over 80,000 Midgets were sold in Japan. The golden years of the minivehicle and small passenger car had arrived.

The Midget was marketed as the Trimobile in the United States in 1959, and its phenomenal success at home and abroad enabled Daihatsu to expand and market new products, such as the lightweight four-wheel truck Hijet in 1961, followed two years later by the four-wheel Compagno Van. In February 1964, Daihatsu introduced a small, four-wheel passenger car, the Compagno Berlina.

In the mid-1960s, the Japanese auto industry underwent a major transformation. Mergers took place among the major motor vehicle manufacturers, and Toyota embarked on a joint venture with Daihatsu and Hino, while Nissan merged with other Japanese auto firms. Together, these two main auto-producing groups controlled over 60 percent of the Japanese car market. Pooling resources in this way enabled Daihatsu to expand further into the small vehicle market, increasingly gearing itself to exports. Over 50 percent of Japanese car production after 1968 would be for the international market.

The 1960s and 1970s marked the heyday of the mini vehicle and small passenger cars, which were affordable and therefore popular among the middle and working class. Daihatsu produced several small passenger car models, including the Fellow in 1966, the Charmant in 1974, and the highly popular and acclaimed Charade in 1977, which won the Car of the Year Award in 1978 and other prizes in following years. In 1980, the highly successful minivehicle Mira was introduced. Daihatsus small car and minivehicle production passed the ten million mark in 1985.

European and Asian exports remain Daihatsus lifeline. In 1979, a European branch office was established in Belgium, and in 1984, production and sales of Daihatsu vehicles began in Taiwan as well as limited production on mainland China. There are Daihatsu sales offices in Australia, Indonesia, Malaysia and Hong Kong. For the sake of greater efficiency, Indonesia became the main parts supplier for Daihatsu in the all-important southeast Asian market. With the production of the locally built Mira mini pickup in Thailand, sales picked up in that country 50 percent in 1990, and with the fall of communism in eastern Europe and the unification of Germany, Daihatsu established offices in Poland and a branch in Germany, Daihatsu Deutsch-land G.m.b.H. Also, a joint venture was concluded with Piaggio of Italy to produce and market vehicles like the Hijet pickups and vans. In all, Daihatsu vehicles are driven in over 160 countries, and its profits continue to grow, as in 1991, when they rose 69 percent over the previous year.

In the United States, by the 1980s, the big three auto manufacturers in the United States had become as vulnerable to Japanese competition as Japanese automakers had been to American competitors fifty years earlier, and in July 1986 Daihatsu opened a new branch, Daihatsu America, Inc., headquartered in California. Nevertheless, Daihatsu struggled in the highly competitive American car market for several reasons. In the early 1990s, in response to U.S. economic concerns, Japans government restricted its automotive exports to the United States. Furthermore, unlike other Japanese auto companies, Daihatsu had unfortunately delayed establishing assembly plants in the United States. With its exports restricted and without production facilities in the country, Daihatsu was forced to withdraw its offices from the United States. Furthermore, while competition in the small vehicle market was intense, the demand appeared to be declining. The company had not achieved renown in the United States as had other Japanese car brands, and it deemed the cost and effort required to launch a massive advertising campaign prohibitive under the circumstances.

Despite its problems in the American market, Daihatsus ongoing concern with environmental standards bodes well for the companys future. Striving to meet the stringent environmental controls of most developed countries, Daihatsu has discontinued using harmful chlorofluorocarbons in its air conditioning systems and in the cleaning of its parts, and it continues its intensive research and development efforts on the automobile of the future, the electric car.

As early as 1965, the companys research and development team began designing a silent, high-quality electric car. The prototype electric car was unveiled in 1966. Four years later, Japans Ministry of International Trade and Industry commissioned Daihatsu to produce nearly 300 electric buses to drive visitors about Japans first International Exposition in Osaka, where the vehicles ran without any problems, over a period of six months. Since then, the number of electric vehicles in Japan has grown steadily. Daihatsu supplies electric golf carts, newspaper and milk delivery vehicles, and security patrol cars, while the Ministry of Construction successfully employs Daihatsu Rugger electric vehicles that can run on an eight-hour charge.

Daihatsu remains concerned with developing a low-cost electric vehicle for the twenty first century. While some analysts are skeptical of Daihatsus, or any automobile firms, ability to bring down the prohibitive cost of electric cars, most acknowledge Daihatsus leadership role in the development of the electric vehicle and point to the fact that unlike most automotive companies, Daihatsu has gone well beyond the planning and design stage: it already has working models. In 1977, at Chicagos International Electric Vehicle Expo, Daihatsu unveiled its electric Hijet model as well as its electric three wheeler. While sales of electric vehicles remain low, in 1988 Japans Environment Agency developed a long range plan to encourage their research and development.

Under the management of president Jiro Osuga and chairperson Tomonaru Eguchi, Daihatsu is extremely well poised to enter the twenty-first century. While some analysts point to a permanent decline in the demand for small passenger cars and to Daihatsus poor performance in the United States, Daihatsu is flourishing in the international market, particularly the market it knows and understands best, Asia, and remains far ahead of most manufacturers in the development of the electric vehicle.

Principal Subsidiaries

Daihatsu Auto Body Co., Ltd.; Daihatsu Metal Industry Co., Ltd.; Daihatsu Transportation Co., Ltd.; Daihatsu Credit Co., Ltd.; Daihatsu Estate Co., Ltd.; Daihatsu America, Inc.; Daihatsu Deutschland G.m.b.H.

Further Reading

Snyder, Jesse, Daihatsu Seeks North American Tie, Automotive News, August 17, 1987; Stark, Harry A., No Riddle Here: Charade Aims at Specific U.S. Market Niche, Wards Auto World, November 1987; Knee, Richard, Daihatsu Gets Piece of the Pie, (Car Shipment via Ships and Trucks), American Shipper, January 1988; Hiromoto, Toshiro, Another Hidden EdgeJapanese Management Accounting, Harvard Business Review, July/August 1988; Chappell, Lindsay, Catch-22: Japans Export Restrictions Hinder Daihatsus Growth in U.S., Automotive News, March 19, 1990; Annual Report: Daihatsu Motor Company, Ltd., 1991, 1987; Daihatsu Motor Company, Ltd., Daihatsu Motor Co., Ltd., 1991; High Octane Relationships, Business Korea, November 1991; Donaldson, K.C., Daihatsu Motor Co., Ltd.Company Report, Salomon Bros., Inc., November 14, 1991; ODell, John, Daihatsus Little Struggle to Succeed, Los Angeles Times, February 10, 1991; ODell, John, Daihatsu Quits U.S. Market; Although Offering Quality, the Company Failed to Woo Many American Customers, Los Angeles Times, February 14, 1992; Elliot, Stuart, Daihatsu Move, The New York Times, February 18, 1992.

Sina Dubovoj