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Mr. Shintaro Yoshida is generally regarded as the father of automobile industry in Japan. Mr. Yoshida founded an automobile factory in 1904 in Tokyo and produced the first entirely Japanese-made car, Takuri No.1 three years later. After that, more and more car manufacturers were established, similar to what happened in the 80's in China. Due to military demand, the Japanese government promulgated the "Military Cars Incentives Act" to provide financial support for automobile manufacturers and this became the driving force for automobile industry development in Japan.
After the defeat in the Second World War, the Imperial General Headquarters instructed for a complete inhibition of car production in Japan. However the law was not enforced. Several car manufacturers such as Honda, Toyo Industries and Fuji Heavy Industries subsequently launched their new car models. In the early 50s', however, America and Europe-made cars were prevalent in the Japanese automobile market and the situation was worsening due to the affordable cheap prices of small car models. This proved to be detrimental for an automobile industry which had past its heyday. At that juncture, the Japanese government has decided to impose custom tax as high as 40% on imported cars, in order to protect the local automobile industry (This taxation law was however abolished in 1978 and till now taxes are exempted for imported cars). At the same time, foreign capitals and investment were not allowed to infiltrate the Japan automobile industry. In order to survive, small holders of the automobile industry gradually adopted joint ventures with foreign car manufacturers, in the name of "business cooperation" or "technical cooperation". Only Honda remained independent and relies on itself to develop national-made car models.
In 1965, officiation of an express highway that connects Nagoya and Kobe cities opens up an era of high speed transportation in Japan. Since then, cars have become a common property and the explosive car ownership greatly stimulates consumer spending on cars. By 1967, Japan has surpassed Germany to become the second largest automobile manufacturer country in the world.
In 70s', two occurrences of "petrol crisis" enhanced the popularity of small and fuel-efficient Japanese-made car. Automobile exports increased exponentially and Honda, Nissan, Fuji Heavy Industries and Suzuki rapidly became the world class automobile manufacturers. From 1772 to 1976 Honda had manufactured 10 million units automobile in 4 years’ time. In 1980, total car production in Japan had reached 11.04 million units and beat U.S. to become the largest car manufacturer and exporter in the world.
Massive export to U.S. has created huge trade deficits for the U.S. and this U.S-Japan car trading issue escalated to become a political one which affects the diplomatic ties between the two countries. To avoid further conflict and remain unaffected, Toyota, Honda and Nissan have moved their production plants to the American soil.
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