Daihatsu Motor Company, Ltd.

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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 Japan’s 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 Japan’s 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 Japan’s 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 Seizo—which 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 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. Daihatsu’s small car and minivehicle production passed the ten million mark in 1985.

European and Asian exports remain Daihatsu’s 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, Japan’s 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, Daihatsu’s ongoing concern with environmental standards bodes well for the company’s 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 company’s research and development team began designing a silent, high-quality electric car. The prototype electric car was unveiled in 1966. Four years later, Japan’s Ministry of International Trade and Industry commissioned Daihatsu to produce nearly 300 electric buses to drive visitors about Japan’s 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 Daihatsu’s, or any automobile firm’s, ability to bring down the prohibitive cost of electric cars, most acknowledge Daihatsu’s 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 Chicago’s 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 Japan’s 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 Daihatsu’s 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.