The "Five-Year Outline Plan for Strategic Industries" issued by the Ministry of War in 1937 clearly applies the wartime system to the motor vehicle industry. During the five years prior to 1941, it targeted a 270% increase in annual production volume, from 37,000 units (domestically manufactured only) to 100,000 units (domestic 90,000 units, Manchuria 10,000 units).

The Automobile Manufacturing Industries Act of 1936 positioned the automobile industry in a key role in the war effort, and the Ministry of War soon after classified motor vehicle manufacturing as a munitions industry. As of 1938, automobile manufacturers had no choice but to focus on the production of trucks, rather than cars, and some were eventually required to produce other kinds of munitions as well.

The adoption of the Automobile Manufacturing Industries Act was the first step in a controlled economy. While ensuring the supply of materials and the demand for automobiles within a certain range, it also restricted the activities of automobile manufacturers, placing everything from production to sales, including materials, labor and capital, under government control.

Automobile Manufacturing as a Model for Industrial Development
From the mid-1920s, the Ministry of Commerce and Industry and the Ministry of War viewed automobile manufacturing as a "comprehensive" industry, because of its interdependence with a whole range of related industries in the provision of parts. Operating on the premise that the development of the automobile industry could serve as a model for industrial expansion in other sectors as well, the government thus granted the automobile industry a key position in the development of Japan's industrial infrastructure.

This concept of across-the-board industrial development, promoting the growth of related industries in a given sector, was to remain a basic feature of postwar industrial policy in Japan.

Increased Government Control
In 1938, a General Mobilization Act brought about increased government control of Japan's industries, including the nationalization of the electric industry and regulations governing the distribution of steel. In August, the Ministry of Commerce and Industry issued guidelines restricting manufacturing to trucks only; production of passenger cars was canceled, with some exceptions. In 1941, following the total ban on petroleum exports from the U.S. to Japan, the use of gasoline for household- and business-owned automobiles was prohibited, and the refitting of vehicles for the use of alternative fuels, such as charcoal, was swiftly carried out.

Between 1930 and 1940, a total of 284,568 motor vehicles (cars, trucks and buses) were produced which were supplied for the most part to the military, with the remainder being allocated for use by government authorities.

With no other choice but to support the wartime system, automobile manufacturers saw their dreams of producing high quality passenger cars completely frustrated. They would have to wait another 20 years, beginning in the mid-1960s, for the motorization of Japan to become a reality.

Emergence of a Japanese Manufacturing System
With the mass production of motor vehicles expanding steadily from 1935 on, the development of the parts manufacturing industries became a priority. Close cooperation between automobile manufacturers and parts makers was essential in order to improve production technology, quality control, and delivery systems.

As a result, automobile manufacturers during this period began to systematically foster the relatively underdeveloped parts industry, a move which foreshadowed the characteristically Japanese approach to manufacturing, based on mutual trust between maker and supplier, that was to flourish after the war and attract so much attention around the world in recent years.