Why Does Japan Make Such Good Cars?

The Rest of the Iceberg

Cars are expensive. Unless you’re talking antiques, their value only goes down. They cost a lot to repair and it’s a hassle when you have to. So it’s no wonder that reliability is a primary consideration when people buy a car. The last thing you want is a money pit.

For the past thirty years, your safest bet has been to buy Japanese. Toyota especially has a well-earned reputation for making cars that run and run. The same is true of Honda and Subaru. Buy one of their cars and you’re likely to spend less time and money at the mechanic’s, and to get more money if you sell it on.

Why are the Japanese so good at making cars? That hasn’t always been true. Some people are old enough to remember when “Made in Japan” was assumed to mean bad quality. How things change. The rise of Japan’s car industry is a fascinating story. At its heart was a creative ability to make the best out of a bad situation.

We need to start in the 1800’s. Back then Japan really didn’t like Europeans. More and more of their ships sailed to Asia every year, trading with Japan’s neighbours and sometimes conquering them. Japan decided to keep the foreigners at arm’s length, and refused to let their ships dock in their harbours.

It worked for a while. But Japanese anxiety went up as they watched Britain’s steam-powered ships humiliate China in the 1840’s. Then, an American commodore sailed into Tokyo harbour and told Japan it could choose between trading with the US or war.

Japan’s leaders decided that if they couldn’t beat the Western powers they needed to join them. Thus began the most impressive programme of modernization and industrialization in the history of the world. The government introduced a constitution, started schools, dredged ports, set up a central bank, laid railways, opened mines, built factories, and established a postal system. Contemporaries said Japan had gone from the middle ages to the modern world in the space of thirty years.

The first car arrived in Japan from Europe in 1897. Japanese entrepreneurs saw the potential of the new technology and by 1910 a dozen firms had entered the field. All failed. That pattern would continue for the next thirty years, despite the government’s attempts to promote the industry. If you lived in Japan in 1930 and you wanted a good car the choice was easy: buy American. Ford and GM both had plants in Japan. The only Japanese firm to get any traction was Nissan, which had an American chief engineer and imported its equipment from Detroit.

Toyota started life making looms for the textile industry. Sakichi Toyoda (they changed one letter in the name for the car company) was a brilliant inventor who saw the future was in cars. The Toyodas took a Chevrolet engine to pieces and tried to build a replica. It wasn’t a success. Nor were their early cars. By 1950, they had built only 2,865 of them, at a time when 7,000 rolled off Ford’s Detroit assembly line every day.

But Toyota had been making huge investments in research and development—physics, chemistry, rubber, fuel, gears, even art—and these were about to pay off.

Japan was in a terrible state at the end of the Second World War in 1945. America had bombed 66 cities, destroying an average of 40% of each. Hundreds of thousands had died. Thousands of factories were gone. Electricity was intermittent. The workers who remained were restless.

But there was a silver lining for Japan’s car industry. As part of the peace settlement, all of Japan’s aircraft manufacturers had to shut down. That meant a ready supply of skilled engineers for Toyota and others to hire. (The same happened in Germany after both wars—BMW used to make planes.) One of these ex-aircraft engineers led the development of history’s best-selling car, the Toyota Corolla.

After the war, Eiji Toyoda went to Detroit to see how Ford made cars, but came home saying that the mass production assembly line could never work in Japan. They couldn’t afford the machines and Japanese law was more generous to workers, meaning they would never enjoy the cheap labour that American firms did.

So they improvised. For example, rather than having a pressing machine set up for each part, they figured out how to change the molds to make multiple parts on a single machine. They found this helped them identify mistakes more quickly, leading to less waste.

As for their expensive workers, they trained them to recognize problems and solve them. At Ford, workers did the same, repetitive job as the cars moved past them on the assembly line. If they made a mistake there wasn’t time to fix it—they just let it roll by. 25% of production time went to rework stations at the end of each line where others tried to find and fix the faults. At Toyota, everyone could stop the production line whenever they saw a problem and everyone was involved in quality control. They didn’t need rework.

This all happened at a time when the developing nature of cars changed what people wanted from them. When someone bought a Ford Model T, it came with a brilliant manual that described and illustrated 140 problems the owner might run into and explained how to fix each one. Ford even gave you the tools.

As cars became more complicated, that all changed. Most people would have no chance of fixing an anti-lock braking system. That was when reliability became so important to car owners. And there were simply fewer mistakes in Toyotas and other Japanese cars.

The result? Japan’s share of the global car and truck market increased from 1% in 1955 to 30% by 1980.

Toyota’s production system, commonly known as lean manufacturing, is now in use in factories of all sorts throughout the world. That means other cars are now less likely to break down on you. You don’t have to buy Japanese these days if you want reliability. But if you’re on a budget or don’t like your mechanic, the latest data suggests that you’d still be better off buying a Toyota.