The Rise and Fall of the Golden Era of Japanese Sports Cars
I love cars. Particularly Japanese sports cars from the late 80’s and early 90’s. As I learned more and more about economics, I began to learn how heavily the economy was responsible for the rise and fall of the sports cars I love so much. Here I will describe the economic events which had a cascading effect on the Japanese car industry from the early ‘70s to late ‘90s, and car culture today. The story begins with underdog Japanese automakers competing against the oligopoly of the "Big 3" American car companies and dominating in the midst of a global gas crisis. Flush with cash, alongside a strong domestic economy, Japanese carmakers poured their heart and soul into engineering exciting sports cars and insane race cars, pioneering new technology and facing off against European racing legends. Finally, a decline in the Japanese economy and changes in import law led automakers to end sports car development, marking the end of a “golden era” of Japanese sports cars.
The 1973 oil crisis was caused by the total embargo of oil to the United States (among other countries) which caused significantly higher gas prices and gasoline shortages. Due to a price ceiling on oil imposed in 1971, it was more profitable to import cheap oil to secure a larger profit. Subsequently, By 1972, more than 80% of the oil in the United States was imported, leading to a devastating reduction in supply when the embargo came. The quantity sold became extremely low, and the equilibrium price of gasoline shot up. A second oil crisis (different cause, similar effect) also happened in 1979, and famous pictures from this time show how severe gas shortages had become throughout the late 70s.
These repeated gas crises caused a demand for more fuel efficient cars, and small, efficient Japanese imports were the solution to the demand. Combined with a better perception of the quality of Japanese vehicles, the efficient, practical imports had begun to dominate the existing oligopoly of “Big Three” American car manufacturers Ford, Chrysler and GM. The Big 3 struggled to match the quality and efficiency of Japanese cars, and spent the next few years playing catch-up to win back their share in the overall US car market. These firms were engaged in monopolistic competition, and Japanese firms had entered and began securing short-run profits. The Big 3 companies had actually set up their financial downturn, as they had spent their money on marketing and production of big cars while ignoring the market's desire for compact cars. The Japanese automakers focused on what the market wanted, making cars which provided maximum utility to US consumers. Comparing car advertisements from the 1970s clearly shows this ideology difference. The American companies inability to satisfy the demands of US consumers led to them being outsold by firms that could, showing how even massive corporations must abide by economic fundamentals, or face massive failure.
As if there weren’t enough things going well for the Japanese in the ‘70s and ‘80s, the dollar-to-yen ratio allowed the Japanese imports to be profitably sold at much lower prices than Domestic vehicles, further increasing the competitiveness of Japanese Imports in America. Even the Japanese government played a hand, identifying how critical the automobile industry was to the economy, and taking measures to financially support its growth. The extreme success of the 70’s, along with a booming Japanese economy due to smart governmental decisions, leads us to the golden era of Japanese sports cars.
Flush with cash, consumer demand for luxury goods in Japan skyrocketed, and automakers were happy to spend their extra money on expensive R&D for sports cars, leading to the introduction of turbochargers for increased power, electronically adjustable suspension, Adjustable aerodynamics and more. It is often said that the easiest way to make a small fortune in racing, is to start with a large fortune. It is also often said "Win on Sunday, Sell on Monday" Referring to how even if automakers lost money by racing, racing success would be powerful marketing for the firm. We can see in the RX-7 advertisement how directly Mazda used their racing pedigree to market their vehicles. Racing is expensive, and Japanese automakers had the resources to race in the big leagues. Japanese automakers succeeded in the racing world, with not just good performances, but dominating ones.
The Calsonic Nissan R32 Skyline, entered in the Australian Touring Car Championship won every race it was entered in for 3 seasons. Its performance was so unbelievable, it permanently earned the Skyline GTR the nickname “Godzilla”. Consumers could purchase street-going versions of these cars, and enjoy the racing technology for themselves. The all wheel drive system was so advanced for its time, that even today, car enthusiasts continue to modify and use this system in their custom, high performance vehicles.
Honda had devoted its resources towards Formula 1, and from the years of 1987-1991, won 5 consecutive constructor and driver’s championships alongside the Mclaren and Williams Racing Teams. Developing just one Formula one race engine costs extraordinary amounts of money. Interviews with Nigel Mansell, who drove Honda-powered Williams cars from 1985 to 1987, revealed that Honda were making and developing 4 to 6 totally different engines in a single season during this time.
Outside of racing, Honda was developing the Honda NSX (Also known as the Acura NSX, as the NSX was used to launch the Acura Brand). The Honda NSX was a mid engined sports car intended to compete against automakers like Ferrari and Lamborghini. The desire for a lightweight chassis led to the development of the aluminum chassis, which paved the path for aluminum manufacturing in automobiles for years to come. The famous racing driver Ayrton Senna, who was driving for McLaren/Honda in F1 at this time, was consulted for input on the handling and chassis.
Until the NSX, consumers were forced to put up with temperamental Italian exotics if they wanted a super car; They were hot, noisy, and cramped, with a plethora of mechanical issues and oversights. The Honda NSX, in contrast, was reliable, comfortable, and practical. The Honda NSX was a newcomer to the supercar scene, and completely shifted the market; If Honda could do it, why didn't all the other manufacturers do it? The Honda NSX went on to sell well, and gain celebrity status, being regarded as one of the greatest sports cars to ever exist due to its practicality combined with amazing handling. Even as the NSX aged, its accomplishments were so great, that It stood as the benchmark for another one of the greatest sports cars to ever be made. The Mclaren F1 was the first "hyper car", a car that truly had no limits or constraints, other than to be the very best. It held the automoblie top speed record for 24 years. Its designer, Gordan Murray said: "The moment I drove the 'little' NSX, all the benchmark cars–Ferrari, Porsche, Lamborghini–I had been using as references in the development of my car vanished from my mind,"
Mazda had been competing in endurance racing, slowly trying to win Le Mans in a car powered by their signature Wankel Rotary Engine. In 1991, the team drivers were told to drive all-out, forgoing the usual conservative racing strategy employed by teams to ensure that the cars would survive to cross the finish line after 24 hours of racing. The car’s superior fuel efficiency meant the car could stop for fuel less often over the course of the race, and the superior reliability of the engine displayed in earlier racing meant that drivers could push the engine to its limits. The engine was so reliable, that after winning the race, covering 3,000 miles at an average speed of 128 mph, Mazda engineers said that the engine was in condition to complete another race with nothing more than an oil change. The money spent on R&D during this time allowed for innovation of technologies in the harshest conditions an automobile could be subject to, and these technologies would slowly be developed into the technology we have today.
Part 3: Where Did it All go?
The golden era of sports cars, fueled by the success of efficient, practical and reliable Japanese cars would have to come to an end eventually. Economic conditions began to decline in Japan, meaning that cars had to be sold at much higher prices abroad for profits to be made. Domestically in Japan, consumers did not have expendable income to spend on sports cars. The increase in the price of imports led to a decline in the units sold overseas, and changes to import law made this decline even more severe. Automakers would have to spend additional resources to comply with different US safety and emissions standards. Automotive manufacturers finished development of one final generation of sports cars in the late 90’s, and took their focus away from sports car development.
Although the era is now long in the past, the cultural influence of these cars is undeniable. The children who grew up watching Fast and Furious are finally old enough to buy the sports cars they saw on the big screen. Automakers are now once again developing fun, sports cars, but for many people, they simply do not scratch the same itch. New cars cannot replicate the analogue feeling, as modern technology trades driving experience for electronic convenience. Gone are the days where a teenager could work part time and buy a new sports car for themselves, and instead younger generations are scooping up old Japanese cars instead. Despite 30+ years of advancement, many car enthusiasts consider modern sports cars as inferior to the classics, and demand has skyrocketed accordingly. Legendary sports cars such as the Nissan Z, Mazda Miata, Toyota Supra, Honda Civic Type R and Acura Integra have all made a comeback with new, modern interpretations of the sports car formula, but are still often overshadowed by their older counterparts at car meets and shows. The famous 25-year import rule means that the dwindling supply of cars domestically cannot be replenished with cars from abroad.
The economic forces which guide the capitalistic world we live in are strong and relentless. While countless firms have collapsed into financial ruin, Japanese auto firms made a series of extremely wise economic decisions which allowed them to experience massive growth and the ability to show the world what they were capable of. Japanese automakers didn’t simply succeed as firms in this time period, they established themselves as a force to be reckoned with. They took on almost every other auto manufacturer across all types of vehicles, and showed them that they had fallen complacent in creating products that consumers actually demanded. Their achievements and design still stand strong today, delivering experiences yet to be replicated.
https://www.roadandtrack.com/car-culture/a28632/acura-nsx-mclaren-f1-gordon-murray/
https://scholarworks.uni.edu/cgi/viewcontent.cgi?article=1030&context=draftings
https://www.wardsauto.com/news-analysis/energy-crisis-aided-japanese-imports
