Nissan ceased production of Austin cars in 1959, and when Hino and Isuzu followed suit in 1965, the same year that passenger car imports were liberalized, the "era of technological tie-ups" finally came to an end.

Emergence of Small Passenger Cars
Small passenger cars (under 1500cc), which automobile manufacturers first introduced in 1955, proved to be a tremendous stimulus in the development of Japan's car market. In fact, the competition for top place in the domestic small car market between Toyota's Corona (introduced in July 1957) and Nissan's Datsun Bluebird (introduced in August 1959) was so keen that it became known as "the BC war", after the two cars' initials. At that time, 90% of all cars sold were for use in business activities, and small passenger cars were used almost exclusively as commercial vehicles in the taxi or hired-car business.

Since the introduction of the fixed-rate (meter) system for taxi fares in late 1945, taxis had become increasingly popular. When smaller cars offering lower rates were introduced into taxi fleets beginning in the mid-1950s, there was a strong surge in demand for the new small cars.

Increased Sales of Cars for Personal Use
Since 1955, when the postwar era officially ended and Japan entered the early stage of its long-term economic growth, car purchases by individuals had been steadily expanding with the rise in personal income. By 1958, the number of cars sold for personal use (including those purchased by government and business organizations for personal use by their staff) made up 54.5% of the total number of cars sold, compared with 25.2% in 1955. The demand for personal-use cars had finally surpassed the demand for cars for use in business (including taxis), which until then had dominated the market.

The main reason for this steady rise in car sales for personal use was their increasing affordability, made possible through substantial cuts in sales prices which were the result of expansions and improvements in manufacturing operations and the establishment of a mass-marketing system.

Establishing a Nationwide Sales Network
Efforts to maximize production efficiency were a response to the tough competition each manufacturer faced in Japan. On the marketing front, Toyota had been the first to adopt a system for "volume sales", and then introduced a new mass marketing-oriented system in 1953. Instead of the earlier system of just one sales company per prefecture, Toyota started switching to a two-channel system, beginning with Tokyo. A complete nationwide two-channel system was in operation by 1957.

Public relations activities were also carried out in order to gain a better understanding of domestic car performance requirements and to stimulate new demand. Moreover, it was decided that the Tokyo Motor Show, inaugurated in 1954, should continue to be held on a regular basis. In addition, manufacturers came up with their own promotional ideas to encourage sales, including the donation of vehicles to international car rallies such as the 50,000km London-to-Tokyo trek sponsored by Asahi Shimbun.

Advances in Production Technologies
As mentioned earlier, car manufacturers from the mid-1950s on were making large-scale investments in plants and equipment, not only to cope with the increase in demand accompanying the steady growth of the Japanese economy, but also to prepare for imminent trade liberalization.

Investments in equipment were focused on the introduction of special-purpose automatic transfer machines. Beginning in 1955, manufacturers concentrated on introducing these machines to certain critical processes and applied them especially in the machining of engine parts, such as cylinder blocks and cylinder heads. These various measures helped bring about the rapid automation of Japan's automobile production system.

Construction of Factories for Passenger Car Production
In pursuit of improved mass production and cost reduction, manufacturers undertook to build factories exclusively for the manufacture of passenger cars, because the previous approach, whereby both trucks and passenger cars were assembled in the same facilities, had just about reached the limit of its capabilities. Accordingly, construction of Toyota's Motomachi Plant started in 1958, and Nissan's Oppama Plant in 1961; Isuzu also built its Fujisawa Plant at this time. Even today these plants remain in service and rank among each company's key production facilities.

Also beginning around this time, each company began to clearly, consistently apply the approach to managing manufacturing resources that is known today as the "just in time" system: the right items are purchased in the right quantities at the right time and immediately delivered to wherever required. With the advent of full-fledged mass production plants, this system proved to be indispensable.

Additional New Facilities
To enhance the performance of domestic cars, manufacturers also undertook the construction of special test-drive circuits designed according to their individual concepts. For exports to the United States and Europe, high-speed test circuits were crucial since high-speed driving was commonplace in those countries, although certainly not in Japan.

The common need of manufacturers for test-drive circuits eventually led to the construction of a special highway testing ground which was completed in Ibaraki Prefecture in October 1964.

Meanwhile, Japanese manufacturers also competed to enhance their technical divisions. Toyota completed its R&D Technical Center in 1954, and Nissan separated its original R&D facilities from the design division to establish an independent R&D Division in 1958. Daihatsu established a special Research Factory in 1962, while Suzuki completed its Technical Center in 1963, Toyo Kogyo its Technical Building in 1964, and Mitsubishi its Automobile Technical Center in 1969.

End of Three-Wheeler Boom
While production was slow to start up for other types of vehicles after the war, three-wheeled trucks in 1948 already surpassed the number produced in 1937, the highest pre-war level, because manufacturers with pre-war experience in three-wheeler production (Daihatsu, Toyo Kogyo) wasted no time in responding to GHQ's authorization of truck production.

With the entry of aircraft and auto body manufacturers into truck production, the manufacture of three-wheeled trucks surged in response to strong demand from small and medium-sized businesses. Until 1959, three-wheelers represented the largest percentage of trucks produced, and it was only in 1961 that sales of four-wheeled trucks finally exceeded those of three-wheelers.

In 1959, three-wheeler manufacturers and motorcycle manufacturers such as Daihatsu, Toyo Kogyo and Honda began taking up midget car production, thus bringing to seven the total number of manufacturers who embarked upon midget car production around this time. As a result, the new midget cars became very popular, with total production increasing from 36,110 cars in 1960 to 82,354 cars in 1964. Also during this period, production of light-duty trucks made a staggering leap from 41,522 to about 360,000 units.

Growing Popularity of Small Passenger Cars
Small passenger cars had been on the market for a number of years, but the concept of a "people's car" was perhaps best embodied in Toyota's Publica which came out in June 1961.

The small car market, however, took some time to expand. Although they were competitive with midget cars in terms of being practical and affordable, the disadvantages of small cars, at least initially, were their comparatively high maintenance costs and the fact that they required a different class of driver's license. Eventually, however, the excellent performance of the small passenger cars outweighed these relatively minor considerations. The Publica Deluxe, which Toyota first marketed in July 1963, enjoyed enormous popularity.

New Marketing Strategies
With the steady introduction of new passenger cars into the market and the shift in car purchases from business to personal use, the competition among automobile manufacturers intensified and they all struggled hard to capture the hearts, minds and pocketbooks of Japanese car buyers.

In 1963 and 1964, manufacturers extended the period of new car warranties, reflecting their confidence in the progress of Japan's automotive technologies. At the same time, banks began offering automobile loans as part of their consumer financing services.

These measures also contributed very significantly to the rapid motorization of Japan which began in 1965.

Motorcycles Take Off
Motorcycle production in 1960 totaled 1,473,084 units, making Japan the top motorcycle-producing country in the world. The tremendous growth in motorcycle use is explained by their convenience, economy, and greater suitability to road conditions in Japan at that time.

In the late 1950s, Japanese motorcycle manufacturers began taking part in international motorcycle competitions, and in June 1959 Honda was the first Japanese manufacturer to participate in the coveted World Grand Prix race. With this kind of stimulus, there was rapid growth not only in the production but also in the performance of domestically manufactured motorcycles.

Motorcycle exports in 1962 totaled 202,090 units, surpassing those of West Germany for the first time, making Japan the world's number one exporter of two-wheelers. This achievement made motorcycles Japan's third largest export item after cameras and transistor radios.

Manufacturers had established some overseas assembly facilities as early as 1955. Ten years later, the overseas production of Japanese motorcycles would begin to expand dramatically.

Exports and Overseas Production: The Preliminary Phase
After an extremely slow start in the postwar years (only two cars were exported in 1947), export promotion policies, implemented by the government in cooperation with the industry, and the all-out efforts of manufacturers resulted in automobile exports worth a total of \39.2 billion in 1960.

With the largest car market in the world, the United States offered a real challenge to Japan's automobile manufacturers. The early years of exporting to North America were full of trial-and-error; nevertheless, exports steadily grew and in 1964 totaled 12,680 units to the U.S., including 1,088 to Hawaii.

Toyota and Nissan had established their first overseas plants in Brazil and Mexico between 1945 and 1955, and in the late 1950s they followed suit in Chile and South Africa.

Manufacturers also participated more and more in international car rallies. In September 1958, Nissan's Datsun 1000 won the international rally in Australia sponsored by Mobil, making it the first Japanese car to win such an event.

Races in Japan were first held in the early Taisho period (1912-1926), but were suspended during World War II and had not been resumed since. Finally, in May 1963, Japan's first Grand Prix car race was held at the Suzuka Circuit in Miyagi Prefecture under the sponsorship of the Automotive Industrial Association (later to become the Japan Automobile Manufacturers Association).