In order to promote the growth and development of the Japanese auto industry the government began its involvement by obtaining military trucks in 1937 from automakers like, Toyota, Nissan, and Isuzu. General Motors (GM) and Ford had already established factories inside Japan, the low tariffs in Japan helped further the incentive to develop foreign factories inside Japan. These foreign factories really hurt Japan’s small automobile manufacturers who could not directly compete with the mass production of Ford and GM and soon disappeared. The only manufacturers who could compete were those that received subsidies under the Military Automobile Subsidizing Law (Togo, 2007).
Prior to World War II the Japanese government implemented policies in order to develop the domestic automobile industry. The first policy that was established in 1918 called the Military Automobile Subsidizing Law. Under this new policy the military provided specific automakers subsidies in order to produce vehicles during peacetime for Japanese citizens. However, in the event of a war the government could take these vehicles from the citizens for use by the military. The subsidies were handed out to manufacturers who produced more than 100 vehicles. Manufacturers were given a 3,000 Yen subsidy. Individuals who owned these vehicles were given 1,000 Yen plus about 400 Yen for a period of 5 years for maintenance (Togo, 2007). With this new law in place it gave incentive for automakers to begin manufacturing vehicles in Japan. It also gave citizens a reason to buy Japanese automobiles rather than purchasing imported goods. In order to advance the auto industry even further and to improve the quality of automobiles produced in Japan the Ministry of Commerce and Industry formed the Rationalization Council for the Automobile Industry in 1931. The council realized that it needed to develop at least one mass produced vehicle. Subsidies again were given to automakers, but this time to those that produced...
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