Ford's New Japan Unit Leader Faces Struggle for Recognition
                    October 9, 2000

                    By TODD ZAUN
                    Staff Reporter of THE WALL STREET JOURNAL

                    TOKYO -- Eiji Iwakuni, a former Honda executive and now the boss of
                    Ford Motor Co.'s Japanese unit, faces one of the toughest marketing
                    jobs in the car business.

                    Ford has tremendous clout as the world's
                    second-largest auto maker. But here in the world's
                    second-largest auto market, Ford's cars sell in tiny
                    numbers. In a sign of how obscure the brand is in
                    Japan, Mr. Iwakuni says that the recent U.S.
                    controversy over accidents involving Ford Explorer
                    vehicles equipped with Firestone tires may even
                    help Ford here by making the Explorer better

                    "For brand awareness, the problem has had the
                    effect of an advertisement," he says.

                    That Mr. Iwakuni can find hope in the tire crisis
                    underscores Ford's unenviable situation in Japan. The U.S. car maker's
                    sales here have fallen in the past four years and now accounts for just
                    0.4% of the Japanese vehicle market.

                    The energetic Mr. Iwakuni promises to change that. He has an ambitious
                    plan to overhaul Ford's lineup, jazz up its dealerships and spread his
                    sales fervor to a dispirited work force. He says his ultimate goal is to
                    revamp Ford's brand image in Japan, to give an air of prestige to the
                    blue-and-white oval badge.

                    Mr. Iwakuni says his effort is a top priority for Ford, because Japan is
                    the linchpin of the promising Asian market. "If Ford doesn't succeed in
                    Japan, it can't succeed in Asia and won't be a world leader," he says.

                    But it remains to be seen if Mr. Iwakuni's Detroit bosses share that
                    view. Ford has focused much of its energy in Japan on reviving Mazda
                    Motor Corp., in which it holds a 33.4% stake, but in doing so has
                    largely neglected its own brand. Ford's sales in Japan peaked at 86,726
                    vehicles in 1990, but 90% of those cars were Mazda-manufactured
                    vehicles with Ford nameplates. Worried that dressing up Mazdas as
                    Fords was creating an identity crisis for both companies, Ford stopped
                    offering many of the models, and Ford Japan's sales sank to 16,551
                    vehicles last year.

                                                But dropping Mazda-made cars is just
                                                part of the explanation for the feeble
                                                performance. Dealers say Ford is
                                                repeating the past mistakes of
                                                American auto makers in Japan by
                                                failing to tailor its models to the tastes
                                                of Japanese drivers. One example is the
                                                Ka, a subcompact manufactured in
                                                Spain that Ford began exporting to
                                                Japan last year. The Ka has the kind of
                                                fun, quirky look that appeals to buyers
                                                here, but dealers complain that the car
                                                is available only with a manual
                                                transmission, while most Japanese
                                                prefer automatics. Sales of the Ka have
                                                stalled at less than 200 vehicles a

                    "It's a cute car but we can't sell it," says Motoo Katsumata, who runs a
                    Ford franchise and a network of Toyota dealerships northeast of Tokyo.

                    Another problem, dealers say, is that Ford spends so little on
                    advertising in Japan that its cars are virtually unknown.

                    Ford headquarters counters that it doesn't make sense to spend a lot
                    of money in Japan until volume picks up. "We need to balance our cost
                    with our expectations," says a Ford spokesman in Detroit.

                    Ford didn't always have such troubles. The company was the first to
                    manufacture cars in Asia and was the leading auto maker in Japan
                    before World War II. But the company was expelled on the eve of the
                    war and by the time it returned, Toyota Motor Corp., Honda Motor Co.
                    and half a dozen other domestic car makers had grown into fierce

                    Ford's history here means most Japanese know the company, but it has
                    a reputation for making big and clunky vehicles. Ford had a minihit with
                    the Taurus sedan in the mid-1990s but dropped it when sales fell.

                    Mr. Iwakuni took charge of Ford Japan 18 months ago after a 32-year
                    career at Honda, where he became known for his ability to revamp ailing
                    dealerships. To improve Ford's image, Mr. Iwakuni is closing decaying
                    and unprofitable dealerships, sprucing up showrooms and telling
                    salespeople to focus on meeting customers. He hopes that with shinier
                    showrooms and better service he can give Ford a refined imported-car
                    image similar to that of Audi or Volvo, albeit lower on the price and
                    prestige scales.

                    He points to the Ford Koga dealership, just outside Tokyo, as an early
                    success. The dealership is on pace to triple its 1998 sales, says Kayomi
                    Shimizu, the 48-year-old manager.

                    Ms. Shimizu's salespeople call on car shoppers at their homes and
                    handle customer complaints personally. They are also studying English,
                    hoping to tap into one group of customers that know Ford's vehicles
                    well -- American expatriates living in Japan.

                    But the Koga dealership is an exception. Ford sold just 1,000 Explorers
                    in Japan last year and 800 Mustangs. Even its best-selling Freda, a
                    reworked Mazda minivan, sold just 2,500 units. To really give the Ford
                    name new appeal here, dealers say Ford needs new models, especially a
                    replacement for the Taurus as an entry-level sedan.

                    Ford plans to introduce four new or redesigned vehicles in Japan by the
                    end of next year. But Mr. Iwakuni doesn't seem convinced his bosses
                    are ready to pony up the money for the advertising and design tweaks
                    that may be needed.

                    "I understand that if you don't have volume you can't spend a lot of
                    money," Mr. Iwakuni says. "But looking at it from Japan, if products
                    don't match customers' tastes, we can't expect to generate much
                    volume. If anyone has a trick to solve this problem, please teach it to

                    Write to Todd Zaun at