Generation Why: Demographics And The Insanity Of Japan's Golden Bubble

For anyone like myself – that is, a car fan who grew up in the 1990s and watched Japan’s sports cars disappear from the American market in one sudden swoop, news that Japan’s once mighty auto industry is being “hollowed out” might come as a shock. The cars that defined my youth – the RX-7s, Supras even the VTEC Honda compacts, are a distant memory. Most of what Japan offers on our shores are aimed at the mainstream, while at home, kei-cars and hybrids dominate the market.

A lot of the criticism leveled at Japan is that their focus on the mainstream market and alternative powertrains is what sparked their auto industry’s current malaise. But this is a superficial and fallacious assumption that supposes that the glut of superb Japanese cars in the 1990s is a baseline for our expectations of what a Japanese auto maker should be building and selling. In fact, it is an aberration that will never occur again.

Japan, early 1990s. It is a boom unlike even the MBS-fueled manic episode that tinted the last days of my adolescence. Everything is expensive, but who cares, because everyone is rich! Contrary to what Detroit tells you, the reason nobody in Japan buys foreign cars is because of conformity. There is a famous phrase in Japanese business culture; “the nail that sticks up, gets hammered down”. You, the salaryman with cash to burn, will support the home team. You will buy one of these fabulous cars created by our all-conquering auto industry, and you will replace it every few years due to the shakken inspection system and because it is uncouth to drive an old, used car.

If 1950s American cars are a reflection of the optimism and prosperity of that era, then let’s look was offered by a country that saw its stock market plunge by trillions of dollars. Gullwinged-Mazda kei cars. Honda Legends with four-figure gyroscopic navigation systems. 1.6L V6s engines in D-Segment Mitsubishis. Why? Because they could. It was pure, unabashed hubris that led auto makers to field umpteen variations of the same mid-size car or open different sales channels for each model, like the Honda Accord, which begot the Honda Vigor, Inspire, Ascot, Innova, Rafaga, Saber and Torneo. All of them were only slightly different from one another but they were sold across three separate sales channels dubbed Primo, Clio and Verno. It was a scenario that made General Motors pre-bankruptcy sales strategy look lean by comparison.

The competitive nature of the Japanese auto industry and the “gentlemens agreement” limiting cars to 276 horsepower meant that an arms race of technology was being waged. R&D budgets were limitless. No technology was too complex or too expensive to implement on any given product. Twin turbo rotary engines at Mazda, four-wheel steering and all-wheel drive at Nissan, active aerodynamics at Mitsubishi, and of course, the all-aluminum, F1-inspired NSX at Honda. Even at the lower end, there were countless high-performance variants of the lowliest econoboxes: Type-Rs and Spec-R s and Cyborg Rs and 9000 RPM, 1600cc VZ-R s and BZ-R’s (not to be confused with our current, boxer-blighted BRZs) which were Corollas with 5 valves per cylinder and individual throttle bodies. That was technology that Ferrari never even saw until long after the BZ-R was introduced.

It was utter insanity, but Japan was in a unique position to support these offerings. Aside from its economic growth, its demographic picture meant that those born just after WWII, when birth rates were still high, were hitting their earnings peak. And since everyone was flush with money, they could afford to buy these cars.

When the bottom fell out of the economy, the cars mentioned above were already too far along in the development cycle to be canceled. The OEMs had no choice but to release them after sinking so much money into their development. And while the higher end product was pulled from our market, they soldiered on in Japan. With no foreign competition, there wasn’t much to lose. Everything was so advanced and over-engineered that they still felt – and in some cases, even looked – fresh and modern despite being a decade old.

Now fast forward to 2013. Nearly a quarter of the population is over 65, and Japan’s population growth is negative. The bulk of consumers are likely buying their last car, and young people are famously not interested in the automobile. Now that there is no domestic consumer base, the product development ethos has irrevocably changed. What were once solutions to local problems and tastes must now be targeted at a global audience, with all of the peculiarities and regulatory demands and business cases that come with it.

Instead of the three-rotor Mazda Cosmo or the gorgeous Nissan Silvia, we have the Toyota 86, a car that was apparently so risky that a corporate behemoth like Toyota had to partner with a relative bit player like Subaru just to bring it to production. The one upshot in the economics of the current economics of the auto industry is that to maximize the ROI for this car, there will inevitably be more variants. Definitely a convertible. Maybe a sedan. Just maybe, if we’re lucky, a shooting brake.

It is fashionable nowadays in the automotive press to stake out a position that brands oneself as the vanguard of automotive enthusiasm, defender of all that has “soul” and “character”, while admonishing the manufacturers for offering bland pablum instead of the exciting enthusiast machines that once existed. Ultimately these are just the ignorant ramblings of those who are unable or unwilling to understand the external forces that shape cars; macroeconomics, government regulations, demographics, geography, trade policies. The auto industry is not a charity that produces widgets for driving enthusiasts. It is a business like anything else, and its output is directly related to the input.

Meanwhile, you can go to the dealer and buy an MX-5 that has barely risen in price, when taking inflation into account, since being introduced nearly 25 years ago. You can still buy an honest-to-god Made In Japan European-market Accord, or a sublime rally-derived Mitsubishi. You can finally buy a new Z car or a GT-R, two products we clamored for in the late 1990s. Now they’re here, along with the WRX , a product that we also cried out for not too long ago. Are things really that dire? Or are we so dissatisfied with our present that the only escape is to romanticize an era that should have never been?