Trade War Watch 9: SECSTATE Disses Japanese C4C

Bertel Schmitt
by Bertel Schmitt

The nerve, the nerve: U.S. Secretary of State Hillary Clinton told Japanese Foreign Minister Katsuya Okada when they met – halfway in Hawaii, so that both had to travel – on Tuesday “that concerns are rising in the U.S. Congress” about Japan’s cash for clunkers incentive scheme, Reuters reports.

As if there aren’t other pressing problems. Such as the economy, global warming, saving the whales, or saving the Marines on Okinawa. (Well, they discussed the Marines. Inconclusively.)

Under the belated Japanese C4C scheme, consumers get up to $2,800 if they trade in their 13 year or older car for new vehicle that meets the 2010 fuel economy standard of 35.5 mpg. So far, so good.

Except that the Japanese shaken inspection system sees to it that there are very few cars in Japan that are older than 13 years. If they exist, they are usually in the loving hands of vintage-otaku aficionados who’d rather sink a few thousand more into their collectors items than trade them in for a new one. Well, they don’t have to. Buy a new qualifying vehicle without trading in a clunker, and the Japanese government will give you $1,132.

Last week, U.S. Congresswoman Betty Sutton had the nerve to introduce a resolution calling for the U.S. Trade Representative to start talks with Tokyo and urged Washington to bring a WTO case against Japan if it does not open up its program to American cars.

As reported by TTAC, Ford, GM, and Chrysler had complained to U.S. Trade Representative Ron Kirk in December that Japan’s fleet renewal program effectively barred U.S. firms from participating.

At the Hawaii meeting, a Japanese trade official said to Reuters that there is nothing discriminatory in the program. Japanese consumers can apply for the incentives with any car as long as it meets the standards. With the usual Japanese cynicism wrapped into unnerving politeness, the official added that cars made Daimler, BMW, and Volkswagen have no problem complying with the standard.

Hillary Clinton and Betty Sutton should have read TTAC before setting off another trade war about nothing. Here is what Ed Niedermeyer had explained in December:

The problem, in a nutshell, is that American automakers have sold a combined 7,901 vehicles in Japan this year. Because those numbers are so low, the Detroit firms are allowed to import vehicles under a program where their fuel efficiency does not have to be rated by the Japanese government. Because it doesn’t have official efficiency data on the low-volume models that use this program, the Japanese government has made them ineligible for the program. If we’re not mistaken though, this importation program isn’t mandated by the Japanese government, but automakers choose to use it anyway. Presumably, if Detroit had any models that could really compete in a 35.5 mpg market, they’d import them through normal channels. But with fewer than 8k units sold YTD, the Japanese market can’t possibly be worth the trouble.

If Detroit wants to partake in the Nipponese C4C bonanza, all they have to do is to submit their cars for testing that certifies that they get 35.5 mpg or better. Never mind. Let’s start a trade war instead.

And wasn’t the short-lived American cash for clunkers program heavily stacked in favor of pickup trucks, the only segment where domestics reign supreme? Did Japan report the USA to the WTO? They didn’t have to. According to official DOT numbers, 5 of the top 10 cars bought under the U.S. C4C program were Japanese brands, no pickups. According to Edmunds, 2 out of the top 10 had Japanese nameplates, 2 were American trucks. Anyway, even a $4,500 voucher for a truck that got just 2 MPG more than the old one did not save American truck sales. Why complain about nothing? A concept Betty and Hillary don’t seem to understand.

Ah, when Betty Sutton proposed the “Cash for Clunkers” program, she wanted to limit the program to cars produced in North America., the Wall Street Journal can’t help to remark. After loud complaints, she relented. Payback time?

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • TonyJZX TonyJZX on Jan 13, 2010

    the fact of the matter is the avg. Japanese is a sophisticated buyer they won't accept the vast majority of american cars the only american cars sold in japan are the niche ones that go to collectors and enthusiasts... you know the ones i'm talking about... the american icons that appeal to japanese, germans, australians and whatever... the ones that are largely irrelevant on a global scale the cars that VW sell are Polos/Golfs and that sort... cars that ARE relevant on a global scale can the US even get anywhere near the gold standard (such as it is) that is the VW Golf? not in my lifetime... not in anyones' lifetime

  • Blowfish Blowfish on Jan 14, 2010

    Even Americans didn’t want American cars during our C4C feel good boondoggle…why would we expect the Japanese to? hey Buddy u need to leave a little bit of dignity for us folks living in the American Continent! Even if it going to include US made cars in Japan C4C, they will only buy another 8,000 more cars. And thats going to save our country? Sometimes over rattling the Sabres is not going to help anything at all. If they were going to buy 8,000 more planes from Boeing, ICBMs, F 16 /18 /22 then its going to make a dent in our near basket case Economy.

  • MaintenanceCosts It's not a Benz or a Jag / it's a 5-0 with a rag /And I don't wanna brag / but I could never be stag
  • 3-On-The-Tree Son has a 2016 Mustang GT 5.0 and I have a 2009 C6 Corvette LS3 6spd. And on paper they are pretty close.
  • 3-On-The-Tree Same as the Land Cruiser, emissions. I have a 1985 FJ60 Land Cruiser and it’s a beast off-roading.
  • CanadaCraig I would like for this anniversary special to be a bare-bones Plain-Jane model offered in Dynasty Green and Vintage Burgundy.
  • ToolGuy Ford is good at drifting all right... 😉
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