Among those companies, it seems that those from Japan turned out to be the one pick of worldwide consumers, in terms of its high fuel efficiency and cost-performance ratio. This alerts the American government, as more of their citizens began to purchase automobiles imported from Japan instead of considering their local brands. As a protection for its local manufacturer, the American government requested a Voluntary Export Restraint (VER) from those Japanese companies, which is nothing but rather reducing the number of exported autombiles from Japan. These companies eventually reached a consensus and decide to decrease their export quantities as a result.
Given such a scenario, where the Japanese automobile companies decrease their quantities of export at the request of American government, who do you think will gain more benefits from this VER?
It turns out that the Japanese automobile companies seem to gain more benefits. Experts note that the following changes occured after the VER come to light:
- One estimate asserts Japanese imported cars were about $2500 more expensive in 1984 than they would have been without the VERS.
- Higher prices of imported cars allowed American producers to sell their automobiles at about $1000 more than they would have.
- Due to these higher prices, the U.S. consumers paid about $10 billion more for Japanese cars in 1985-86 than they would have otherwise, and this money has gone directly into the pockets of the Japanese automobile producers.
- Much of the additional profits have been invested in increasing productive capabilities which allowed those companies to further reduce the cost of producing new cars in subsequent years.
- The VER did succed in saving American jobs, however, the cost per job saved was about $160,000 per year.
Why is that? Certainly, we can't tell without investigate it in-depth. The rest of the website serves as an interactive learning guide that leads you to find the answer to this story of automobiles. Hurry up!!! See you on the next page!