WASHINGTON, DC, May 13, 1998--Passenger car sales in Japan plunged 20 percent in the first quarter of 1998 compared with the first quarter last year, according to the Japan Automobile Manufacturers Association (JAMA) newsletter, [Japan Auto Trends], released today.

The sharp drop is due in part to abnormally brisk sales in the first quarter 1997 as consumers rushed to beat an April 1st sales tax hike. Nevertheless, even taking this into account, the market is down significantly, still 9.2 percent below the 1996 first quarter. Japan Auto Trends reviews the impact of the market decline on imports. The 34 percent drop in import sales is attributed almost solely to the decline in imports from overseas Japanese plants and disappointing sales from the US. Imports from Europe and elsewhere, while down, actually increased market share slightly from 4.7 percent to 4.8 percent. This difficult market situation has drawn greater attention to consumer service, particularly from import companies. Shaky consumer confidence in a small market means that competition will play an even keener role in determining if and where consumers spend their money, William C. Duncan, General Director, JAMA USA said. In the end, the level of demand and where it goes will ultimately be determined not by the government, but by consumers. Consumer confidence in product quality and manufacturer attentiveness to aftermarket service are the keys to increased sales. He added there is growing evidence to show that auto and auto parts makers, domestic and import, are responding to the challenge through price incentives and other new programs designed to woo the consumer.

Responding to the market, Ford and Mercedes-Benz, in particular have announced a greater focus on building customer loyalty and satisfaction by improving after-service care.

According to Japan Auto Trends, Ford reports it is discounting some of its after-sales service fees. Meanwhile, Ford has all but given up on its earlier numerical sales goal as well as its focus on gaining as many dealerships in Japan as possible. In an April interview, new Ford Motor Company (Japan) President Eiji Iwakuni said, You no longer need so many dealers all over Japan.

Mercedes-Benz, confronting the market decline, is now offering a comprehensive maintenance program called Mercedes Care which provides free service for three years from the date of new car registration.

Japan Auto Trends also reports on Tennecos move to build a replacement shock absorber market in Japan. In addition, the newsletter reviews the formation of a new Japanese automotive products retailers trade association designed to promote the industry in an economic environment beset by declining sales and profits--Auto Parts and Accessories Retailer Association.

JAMA, headquartered in Tokyo, has offices in Brussels, Singapore and Washington, DC.