Revised: June 30, 1996This study assesses the inventory and productivity performance of the Japanese
and US automotive industries in recent decades. Within each country we distinguish
between vehicle assemblers and parts suppliers. In Japan, assemblers and suppliers made
dramatic inventory reductions and productivity gains, particularly during the 1970s. By
comparison, we find an unbalanced pattern for the United States: American assembly
plants have been streamlined, but parts suppliers have stagnated. In both countries our
findings suggest a strong association between inventory reduction and productivity
growth.The MIT International Motor Vehicle Program, the UCLA Center for International Business Education and
Research, and the Institute for International Economic Studies in Tokyo, Japan
