Japanese automobile manufacturers began introducing luxury models into the American market in 1989 (Flint, 1990). By 1991, all of the major Japanese manufacturers had an entry into the market. This research examines the early penetration by Japanese manufacturers in the American luxury car market.
Since 1973, the time of the first Arab Crude Oil Embargo against western countries, the automobile manufacturing industry in the United States has been on the defensive against foreign competition. The American industry suffered additional setbacks in the economic recession of the early 1980s, and, although the American Big 3 automobile manufacturers have made progress since the end of the recession, they continued to see their market share erode through 1989, at which time it began to stabilize (Flint, 1991). By 1989, the foreign manufacturers' share of the American new car market had reached 32 percent (Flint, 1991). In 1990, the foreign share increased to 34 percent; however, in 1991, it has fallen back to 32 percent (Flint, 1991). The most intense foreign competition is provided by the Japanese manufacturers, which hold a combined share of the American market approximating 25 percent (Leach, 1990).
While American automobile manufacturers have become accustomed to stiff competition from the Japanese manufacturers in the mid and lower segments of the American new car market, they have also been accustomed to having almost complete control of the high profit luxury end of the market automobiles with list prices exceeding $25,000 (Flint, 1990). The heavily promoted Mercedes and BMWs have not posed serious threats to American market shares. In 1990, Mercedes sold approximately 32,000 cars in the United States, and BMW sold approximately 26,000 (Leach, 1991). During that year, Cadillac sold almost 300,000 cars, and Lincoln sold approximately 235,000 (Leach, 1991). European cars, however, do dominate the high end of the luxury c...