Toyota Motor Corp.'s Yoshio Ishizaka, executive vice president in charge of overseas operations, expresses the usual self-congratulatory tone of Japanese automakers about their North American operations.
"We're investing in America, expanding r&d, increasing purchasing and employment," he says. "We've already localized 60 percent of our sales. We don't have any issues in front of us."
If the goal is 60 percent local production - the percentage of cars sold in the United States that are made in North America - then he is right to be pleased. But that implies he is satisfied with imports accounting for 40 percent of Toyota's model mix in the United States.
In Europe, GM and Ford are at a higher level. Locally built cars account for almost all of their sales there.
By contrast, the Japanese industry's production rate in North America peaked at 69.3 percent in 1996. Then it slipped. It dropped to 61.9 percent in 1999 and 2002.
As the U.S. market grew after 1996, Japanese carmakers boosted their North American production. But they increasingly relied on imports from Japan to meet the higher demand.
Japan's exports to North America fell in 1996 to 30.7 percent. They've risen four of the seven years since.
Japan's exports to North America last year fell to 1.79 million, down from 2.08 million the year before.
The pattern for years has been for Japanese sales in the United States to rise, after which the Japanese build plants to meet demand. Local production, therefore, remains above 60 percent but below 70 percent of total sales. That's not true for each Japanese carmaker. But the pattern is well established across the industry.
Several new assembly plants, notably Nissan Motor Co.'s plant in Canton, Miss., and Honda Motor Co.'s factory in Lincoln, Ala., raised the local production level back to 67.2 percent in the first five months of 2004.
But there is little evidence that the Japanese industry as a whole will break through the unofficial ceiling that limits local production to less than 70 percent anytime soon.
One result of the Japanese industry's continued reliance on exports to America is that the overall U.S. automotive trade deficit with Japan, including vehicles and parts, has not improved all that much recently.
The deficit narrowed from $43.3 billion in 1993 to $29.60 billion in 1996. By 2003, it had widened again to $43.86 billion. Automotive trade thus made up the lion's share of America's total 2003 trade deficit with Japan of $65.97 billion.
Toyota President Fujio Cho says the local production rate remains stuck in the 60 percent to 70 percent band because of American appetites for Japanese cars.
"We keep trying to raise it by opening new plants," he says. "But thanks to American consumers, our sales keep growing faster" than new plants can come onstream.
Niche marketing plays a role as well. Toyota will always rely on imports to some extent to meet American demand, he says.