The two oil crises caused major changes in the global automobile industry. The responses by individual automakers would subsequently result in substantial differences in their international competitiveness.

In the United States, a series of laws seeking higher automobile fuel efficiency was adopted. The Energy Policy and Conservation Act, enacted in December 1975, divided motor vehicles into passenger cars and trucks and set Corporate Average Fuel Economy (CAFE) standards. The standards were tightened year-by-year: in the case of passenger cars, manufacturers were required to achieve fuel efficiency of 27.5 mpg1 starting in 1985. The Act also provided that manufacturers that did not achieve the annual standards would be required to pay a penalty of 5 dollars per vehicle for each 0.1 mpg in excess of the standards.

The Energy Tax Act2, also known as the Gas Guzzler Tax, was enacted in 1978. This Act set the minimum fuel efficiency standards to be achieved for each model and created an obligation to pay a tax for models that exceed certain standards based on the fuel efficiency of the vehicle.3

At the time of the second oil crisis in 1979, energy conservation stickers were applied to vehicles in response to a call from the U.S. president, and long lines formed at gasoline stations. American automakers, whose main products were large vehicles that consumed considerable amounts of gasoline, all faced increasingly difficult circumstances.

The American passenger car market fell steadily from its peak of 10.95 million vehicles in 1978, dropping below 8 million vehicles in 1982. To counter the decline, the U.S. Big Three entered the small car market, but they were unable to compete with Japanese cars in price or quality, and sales were poor. In 1980, all of the Big Three automakers posted losses. Under these circumstances, Japanese cars benefited from their reputation in the market for high quality and fuel efficiency.

Energy conservation was also being promoted in Japan, and beginning in January 1976 the Ministry of Transport released the fuel efficiency obtained from the 10-mode cycle emissions testing as a part of passenger car model certification. Further, in 1979, the Law Concerning the Rational Use of Energy was enacted, establishing standards for passenger car fuel efficiency. These fuel efficiency standards were calculated based on the Corporate Average Fuel Economy (CAFE) standards for each vehicle weight class to be achieved by automakers in 1985.

Demand for resource and energy saving rose in the late 1970s in Japan and other countries, and full-scale competition in technology development in these fields was expected. In 1978, Toyota proposed a research and development plan for the 1980s that was centered on technologies to reduce fuel consumption such as raising efficiency and reducing vehicle weight. The plan was proposed under a policy of "adopting comprehensive technology strategies that anticipate societal demands and technology trends and implementing research and development" and was collectively known as the F-3 Program.4 The plan was implemented in the following manner:

1. 1.All engineering divisions collaborated and set development targets based on medium- to long-term projections.
2. 2.The experiences gained from implementation of emissions control projects were used to undertake technology development for the entire vehicle under a project system.
3. 3.F-3 Program research and test vehicles and research engines were set as tools for concrete implementation of programs and as venues for demonstrating results.
4. 4.The program was carried out by the entire Toyota Group with cooperation from Nippondenso Co., Ltd. (now Denso Corporation) and Aisin Seiki Co., Ltd.

The program addressed the broad range of technology fields indicated below.

1. 1.New materials such as resins and high-tensile steel plate;
2. 2.Electronics technologies including engine control; and
3. 3.Vehicle characteristics, including new powertrain structures, tire rolling resistance reduction technologies, and miniaturization of engine accessories.

In early 1980, the F-3 Program was reviewed based on a long-term outlook, and the following technology development categories were added:

1. 1.Continuously variable transmissions, and new materials such as ceramics and synthetic materials; and
2. 2.Electronics technologies extended to chassis, drive control, and displays.

The new technologies developed under the F-3 Program were steadily incorporated into mass-production vehicles, and Toyota's research and development project systems took root as a result of implementation of the program.