By on November 5, 2012

“No, Japan is not a closed market, come on, it has zero percent duty on cars.” Such spoke Yasuo Maruta, Communications Director of Volkswagen Japan, today at Volkswagen’s  Tokyo offices. Volkswagen Group sold 66,000 cars in the first ten months of the year in Japan, and is expected  to sell roughly 80,000 by the end of the year, making it Japan’s largest car importer, a title it held for as long as I can remember.

Maruta’s employer wants to enlarge its footprint in Japan. As a contribution to Strategie 2018, Volkswagen alone wants to sell more than 100,000 cars in Japan. Together with Audi , that would amount to roughly doubling its sales.

Volkswagen is not worried about the non-tariff barriers alleged by the American Automotive Policy Council on behalf of its paymaster GM, Ford and Chrysler. American companies have for all intents and purposes given up on the Japanese market. Instead of selling cars, they sell fiction about closed markets, manipulated currencies and threatened U.S. jobs. All Detroit brands together sold a little over 10,000 units in the first 9 months in Japan, a fraction of Volkswagen Group’s imports.

Maruta has a hard time coming up with hurdles that may be in the way of successful imports. “Type approval procedures are much less of a problem than in the past,” says Maruta, while noting that Japan’s preferential Handling Procedure allows small series of up to 2,000 units into the country with the barest of paperwork.   Pressed hard to find something, he says that his company currently cannot import cars with CNG tanks into Japan. (Volkswagen’s Passat CNG hybrid is not available in the U.S. either.)

Volkswagen wants to expand its sizable dealer network in Japan, something that would be impossible if the propaganda of the anti-Japan lobby is to be believed. “Sure, land for dealerships is expensive in Japan, especially in the cities,” says Maruta.  Except for a lack of money or patience, nothing bars an importer from establishing dealers  in Japan. “Market entry takes a lot of time and money,” says Maruta, “you must go step by step.”  Volkswagen has been in Japan since the ancient times of the original Bug.

Maruta is very familiar with the issue. Before coming to Volkswagen, he worked for Mazda, then GM. He recalls “when Toyota sold the Chevrolet Cavalier, I sold Saturn, and Chrysler tried to sell the Neon, they called it the Japan killer car, but unfortunately …”

Being a company that is heavy on small cars, Volkswagen has issues with Japan’s special treatment for Kei cars. Says Maruta: “Automotive tax for a kei is some 7,200 yen ($90) a year, compared  to say a Vitz for which you would have to pay more than 30,000 yen ($374) a year.” Kei cars have 33 percent of the Japanese market, a segment Maruta’s employer can’t touch, because Volkswagen does not have the product.

Nothing precludes a foreign manufacturer from making and importing a kei, but it would be a silly exercise.Volkswagen’s design chief Walter de Silva “drew us a schematic, showing that he would need a completely new platform for a Volkswagen kei car,” chimes in Maruta’s collegaue, Dorothea Gasztner. “An outsider would never reach the volume necessary for a successful entry into the kei car market.” Even Japanese car companies battle with the low volume of keis. Production more and more concentrates on a few key makers such as Daihatsu and Suzuki that produce keis for other Japanese car companies. Subaru for instance handed its kei car production to Toyota’s Daihatsu, in return, Subaru manufactures the low volume hachi-roku sports car.

Volkswagen tried with an engagement with Suzuki, but it was thwarted. Not by a non-tariff barrier, but by a rambunctious Osamu Suzuki.  Now, Volkswagen, along with importers allied in the Japan Automobile Importers Association, lobbies  for an end of the preferential tax treatment of kei cars.

Another limitation to successful entry into the Japanese market is the Japanese customer that predominantly prefers homegrown cars.  Maruta hopes to convince more. A recent study shows that 25 percent of Japanese car buyers would consider a foreign car, “whether they buy one is another matter,” Maruta says.

The key is having the right product that speaks to the peculiar Japanese psyche, where small is beautiful, and big is boorish. Volkswagen found that product in the small but peppy Up! that shapes up to be Volkswagen’s most successful Japanese product launch ever.   In a few days (and after we have found a magnifying glass) we will look closer at the success of the Up!  in Japan.

In October, sales of cars imported to Japan rose 20.1 percent year-on-year to 23,597 units, data released by the Japan Automobile Importers Association show.  January through October, 257,206 units were imported.

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37 Comments on “Volkswagen: “Japan Is Not A Closed Market.”...”


  • avatar

    Given the absence of formal barriers, what explanation does VW provide for its inability to capture a significant share of the Japanese market? Non-mini car sales will rebound to over 4,000,000 this year, so VAG’s share is about two percent, far lower than in Europe and also significantly lower than in the U.S. Double a small number, and it’s still a small number. Does VW feel that it’s not offering what Japanese buyers are looking for? As the article suggests, is there simply no way to get most Japanese buyers to consider a non-Japanese car?

    • 0 avatar
      wsn

      Well, it’s the same reason that Toyota outsells VW many to one in the US of A.

      Yes, VW’s American share is at about 3~4%, which is higher than 2%. But consider that VW entered the US market way earlier than Toyota and that there is a substantial group of Americans who can identify themselves at German decendents. So, I would say, VW performs very similarly in both markets.

      In China, VW outsells Toyota by a large margin in the super cheap subcompact (many for taxi use) market, but still lags in the midsize market (Passat vs. Camry) despite entering that market almost a decade earlier and a general resentment of Japan by Chinese.

      • 0 avatar
        silverkris

        I’d think that a lot of VW’s midsize market offerings in China are accounted for by the Santana, an older design that is a popular for taxis and other fleets. The Passat tends to be a more upscale model, at least in China. So I’d opine that VW does pretty darned well in China, way more than even the Camry there (I hardly saw many on my trip to Shanghai earlier this year), and has kept their market lead since they got started in the Middle Kingdom.

        Going back to Japan, wasn’t VW’s distribution handled by a local importer, Yanase, for many years before VW decided to handle their own Japanese distribution business?

    • 0 avatar
      th009

      There was a time when 75% of Americans would not have considered buying a foreign car, either. And

      Money and patience. Develop the right product, build brand, add dealers, develop more product, add more dealers — it all takes time. And since no imported brand has blazed this trail before, it takes even longer.

      Incidentally, Volkswagen Group’s US market share was also about 2% a few years ago — before they developed several new products specifically targeted at the US market.

    • 0 avatar

      Michael:

      Volkswsgen’s explanation is in the second to last paragraph: ” A recent study shows that 25 percent of Japanese car buyers would consider a foreign car, “whether they buy one is another matter,” Maruta says.”

      Those 25% cut the market potential down to 880,000 possibles. (The non-kei market doesn’t look like 4 million this year, but more like 3.5).

      As a research expert you know what “consider” means: “Maybe, if everything else is better than the Japanese car.” Else being product, price, consumption, after-sales, residual value, dealer network etc. This limits the market even further. It looks like this year, more than 310,000 imported cars will be sold in Japan. Which would amount to a market exploitation of 35%.

      Volkswagen wants to double its sales, not by taking from Mercedes, BMW et al, but by bringing in product and expanding its dealer network to convince more of the 880,000

      • 0 avatar
        wsn

        Why do you use the non-kei market? Why not include the kei cars?

        If Japanese like kei cars and you want to enter the market, then offer kei cars. Same with the American market. People like pickups, so Toyota offers the Tundra, even though they can barely sell any Tundra outside of the US.

    • 0 avatar
      philadlj

      I don’t believe there IS a way to get most Japanese buyers to consider a non-Japanese car. The reason is not a matter of protectionism or xenophobia, but simple common sense, with a dash of honor.

      If Japanese automakers fulfill virtually every vehicular need a Japanese buyer could possibly want, why would they look elsewhere? In America the energy crisis persuaded/forced many Americans to buy Japanese, because the Detroit equivalents were subpar. Accord and Camry took off because the Detroit equivalents were subpar, and many Americans have never looked back, afraid to get burnt by Detroit metal once again.

      The Japanese automakers have never failed to provide the right vehicles at the right times for Japan, so there’s never been a need or an opportunity for an import to move in and fill the gap. Barring a huge and sustained failure by the Japanese automakers to offer the Japanese the cars and trucks they want (all but impossible considering how broad and diverse a spectrum of products they offer), imports will never get their proverbial foot in the door…only a toe or two, like VW.

      That door isn’t closed to keep others out, it’s closed because it closes properly, which is what a door is supposed to do.

      • 0 avatar
        oboylepr

        I have never heard it explained better. Well said.

      • 0 avatar
        niky

        Nice post. And that’s probably the long and short of it. While US customers do have a considerable positive bias towards Japanese cars, in the Pan-Pacific arena that is their stronghold, customer loyalty is over-the-top. Even more so at home.

        Just like where I live. People don’t spend a lot of money on foreign beer here because the local beer tastes good and costs less. Lot of friends who come over get simply sloshed on the stuff, and expats who move in drink nothing but.

    • 0 avatar
      L'avventura

      The same reason Toyota (or any other Japanese brand) has minuscule German market share. When domestic brands are very competitive there is very little reason to purchase a foreign substitute. Japan is also a fiercely competitive market with 9 domestic brands at each others throats.

      But there are other reasons. As gas is $7/gallon fuel efficiency is one of the main purchasing motivators (as it is in Europe). The key difference is diesels vs hybrids.

      VW specializes in diesels for their fuel-saving technology. In Japan, diesels have little to no presence, Tokyo for instance bans diesels within the city. Gasoline hybrids and kei-cars are really where the volume is at in Japan.

      Next is the fact that VW’s dealer network in Japan is anaemic. They have have around 250 dealers in all of Japan, Toyota-alone have near 5,000 dealerships in Japan. VW aren’t sold in certain areas.

      Then there is production. VW builds no cars in Japan, their Asian-production is really centred around China (though they are considering building a Thai factory). The VW Up! has to be shipped in from Slovakia half-way around the world. Keep in mind, its estimated that 25% of the cost of a car is in shipping.

      Lastly, the yen has only really started to sky-rocked after the 2008 US Housing crash. The yen five years ago was very weak, meaning that the Japanese market wasn’t very attractive. Few years ago 1€ got you around 170 yen, now that 1€ gets you 90yen. Meaning, you get a hell of a lot more euro for yen these days. Meaning that Japan was a largely ignored market by European automakers until the strong yen made them attractive.

      • 0 avatar

        How miniscule are Japanese market shares in Germany? A quick search found only Toyota sales in Europe, about 800,000 a year, down from 1.2 million in 2007. So about six percent of the total?

      • 0 avatar
        th009

        All the European sales data is here:
        http://www.acea.be/collection/press_room

        Toyota 4.5%, Nissan 3.9%, Honda 1.7% fpr 2012 YTD.

      • 0 avatar
        L'avventura

        @Micheal Just to illustrate how important building locally is to protect yourself from currency and labour fluctuations. Let’s consider the VW Up!:

        It base model sells for 1.495 million yen in Japan. This is around €14,500 in todays exchange rate.

        That same 1.495 million yen would have been just €8,800 in 2008 before the yen sky-rocketed.

        If this was 2008, the Up! could not be sold for what it is now. VW would be losing money. Which is why you need to build as locally as possible. Right now, the yen is strong, who knows a couple years from now.

        Currency fluctuation are a huge business risk, which is why the Japanese built plants in the US and EU (as well as across Asia and Latin America). Until that same level of commitment and investment is made by US/EU countries in Japan, its going to be difficult to grab large market share. Three is no free lunch.

  • avatar
    BrianL

    Time to call a spade a spade.

    AAPC quoted a report from the CAR group. Ford sponsored the study. The CAR group is affiliated with VW, Toyota, Honda, Nissan, Ford, GM, Chrysler, and others in the industry.

    Bertel,
    When you keep saying that Japan isn’t an open market, why don’t you include total market share of the players and not just imports. If you want to make it non Kei cars, that is fine as well, but only showing imports and saying that VW is the largest importer therefore, not closed is terribly misleading.

    • 0 avatar

      1.) I publish kei and non-kei Japanese market data monthly. The data is there. Hint: Market share = unit sales divided by total sales.

      2.) The market share argument is false. Nobody is entitled to market share. You need to earn your share. The market share argument proves nothing except own inability.

      3.) The U.S. has lost the moral authority to complain against closed markets. The most profitable part of the U.S. auto business, trucks, are a U.S. monopoly, protected by chicken tax tariffs and pro truck CAFE rules. To distract from this, Detroit throws out the “closed market” red herring. Don’t eat it.

      4.) For the rest, see answer to Michael

      • 0 avatar
        philadlj

        5.) Toyota already calls its Spade a Spade:

        http://www.thetruthaboutcars.com/2012/07/toyota-calls-a-spade-a-spade-saywhat/

      • 0 avatar
        BrianL

        1.) You seem to do this all the time concerning the US market, but every market about Japan no being closed only includes data about imports, many being Japanese brands being imported. You should include it so that people can see the 2% share by the biggest non Japanese auto manufacture.

        2.) I disagree. While the Japanese market isn’t 100% closed, probably 95% of it are Japanese brands. Providing this information makes people ask the question why? Not for US brands, but for more European and Korean brands as well.

        3.) Notice, I didn’t say anything about the US and its market. You are the one throwing the red herring here about US truck market. But, for the record, Toyota is selling trucks in the US and Nissan was for awhile. While Toyota isn’t making its initial sales goals, it is improving, but started at the time of a gas price spike. BTW, SUVs are very profitable in US and many foreign brands do well in this market.

        4.) It is interesting to note that they might consider this. But, what about this article.

        http://wardsauto.com/europe/european-auto-makers-leery-eu-japan-trade-pact

        It is an interesting read on why some people might not consider a non Japanese brand.

    • 0 avatar
      challenger2012

      BrianL H You need to back up your argument, and you are correct in your statements as shown below from the article.

      Europe’s beef is with Japanese technical rules, and the difficulties of selling in Japan, rather than tariffs – which are not charged on autos being imported into the Japanese market. As a result, a trade deal focused on tariffs would not help the Europeans, as EU import duties are charged on Japanese auto exports.

      “We’ve told the European Commission, EU member governments and (members of the European Parliament) that we need first to obtain from the Japanese an agreement that any car that’s been certified for sale in the EU should be able to enter Japan without any further testing or authorization,” says ErikBergelin, director of trade and economics for ACEA, the European auto makers’ association.

      “Second,” he says, “there should be a change in Japan over the privileged treatment of Kei cars.” These are small, inexpensive, 0.66L cars, almost exclusively designed for Japan, which receive preferential treatment on taxes and environmental legislation and which comprise a sector of the market to which the EU industry is closed.

      Here is another source which details NTB’s
      http://www.counterpunch.org/2009/07/03/detroit-s-collapse-the-untold-story/

      • 0 avatar
        niky

        Kei cars are, in part, a social subsidy. Telling Japan to stop giving preferential tax treatment to Keis is like telling any other government to stop offering social security because it hurts insurance and assurance policy sales.

        The technical barrier is nothing. It’s the same barrier anyone will find entering the US, or which US cars will find entering Europe. That said, it’s about time we accepted a globalized NCAP system, because keeping several different sets of rules hurts global competitiveness.

      • 0 avatar
        100 mph fastball

        There’s a reason Japan has different environmental and safety rules compared to Europe: geography.

        Name one European nation with Japan’s regular encounter with earthquakes, tsunami, typhoon, and volcanic eruptions. Japanese cities are designed differently than European cities partly to compensate for these recurrent geographic hazards. There’s a reason why the Japanese prefer kei cars – it’s strongly suited to transporting people and goods in a nation the size of California, yet with 1/3 the U.S. population.

      • 0 avatar
        BrianL

        niky,
        If Japan wants to work out a deal with the EU for lowering its tariff on imported cars, then Kei cars could be on the table as a concession for Japan. If Japan says no, then it might have to live with the tariff. Their choice.

        And the technical barrier means a huge amount. The rules are more clear in EU and the US. For Japan, it seems that more agencies can affect the car being for sale. Read this from the article I posted.

        “Garel Rhys, a professor and president of the Centre for Automotive Industry Research at Cardiff University Business School, in Wales, agrees the main headache for European exporters is not so much tariffs on imported vehicles as Japanese rules that seek to restrict imports under cover of safety or health regulation.”

        This makes it much more difficult to compete when your cars aren’t allowed.

      • 0 avatar
        outback_ute

        Complaining about the Kei cars is laughable given that many/most European countries have similar/equivalent sliding taxation scales, albeit not necessarily to the extent of aspects like the parking requirements. Presumably if the Tata Nano met the safety regs there would be nothing stopping it being sold as a Kei.

  • avatar
    Rvinyl

    Interesting…noob though I am I never even thought that Japan would allow imports without insane tariffs.

  • avatar
    challenger2012

    October 30, 2012 Japan’s Tokai Rika Co becomes the 9th company to plead guilty in a US Department of justice crackdown on auto supplier price fixing. This was in the USA, imagine what happens in Japan on a daily basis. No wonder no foreign automaker builds there.

  • avatar
    KixStart

    The Japanese market isn’t “closed” but it also isn’t “easy.” Have we heard the end of this? Probably not. :(

    I do find it interesting that VW won’t give the Kei class a go. Surely there are other markets where they could sell something along those lines? Maybe the combination of uncertain market demand and low unit profitability makes it extremely difficult to justify the investment.

  • avatar
    Bela Barenyi

    This might sound naive, but if Japanese customers prefer Japanese, why not creating a Japanese brand, just for Japan ? Just sell existing models under a new Japanese brand. Instead of [insert any existing european/US-american brand], a brand called either “Satou” or “Takahashi” or “Tanaka” or “Watanabe” or “Itou” or “Nakamura” or “Yamamoto” or “Kobayashi” or “Saitou”. A VW Scirocco might perhaps sell better in Japan as a “Nakamura 5000 GT”…. I know, it might
    backfire and it does not make sense, if the people know that it’s just rebadged VW, but if there are enough people in Germany who can be tricked into believing that “Grundig” does still exist and stands for “Made in Germany” quality, than how hard can it be to trick Japanese customers that a car called “Nakamura” is an domestic brand. I realize… it sounds like a Chinese company who creates a German sounding brand… “Buy the new Mueller 1000GLS….!”
    Okay, I admit, a stupid idea…

  • avatar
    oboylepr

    Whether the JDM is open or closed, easy or difficult is arguable but I do know this, if the day ever comes where there are boatloads of SB impalas going to Japan, thats the same day that Hades freezes over!

  • avatar
    dolorean

    ‘Maruta is very familiar with the issue. Before coming to Volkswagen, he worked for Mazda, then GM. He recalls “when Toyota sold the Chevrolet Cavalier, I sold Saturn, and Chrysler tried to sell the Neon, they called it the Japan killer car, but unfortunately …”’

    Interesting that Maruta brings this up. In 1997, Saturns began to be sold in Japan and did rather well. Then GM brought the Ion over with great fanfare and sank the brand within two years due to the Ion’s sub-par quality issues. However, GM proved American cars can do well in Japan.

  • avatar
    RRocket

    “No, Japan is not a closed market, come on, it has zero percent duty on cars.” Such spoke Yasuo Maruta”

    Cue the clown music and a UAW talking head now….

  • avatar
    Varezhka

    Just out of curiosity, have there ever been a Kei car by a foreign manufacturer, apart from the short lived Smart K by MB?

    Of course, given the ultra low margin and how competitive the Kei segment is, I doubt it’s a segment that VW wants to go into.

    • 0 avatar
      L'avventura

      Aside from the Smart ForTwo K, the Fiat 126 was officially sold as K. There is also a low-volume New Zealand car maker named Fraser, that had a Lotus 7 with a Suzuki Cappucino engine that can be registered as a kei. I think you can also register the older sub-660cc Fiat 500s, as well as the BMW 600 Isseta, as kei as well.

      The Kei’s aren’t even profitable for the Japanese, as its really dominated by Suzuki/Daihatsu (and most other brands like Toyota, Nissan, Subaru, Mazda just rebadged Suzuki/Daihatsus); there is very little incentive for foreign brands to enter that market.

      What may change that is the emerging market in Asia. If VW, or any other car maker, make their emerging-world small car with 660ccs, it fits it can be sold as a kei in Japan.

      But the new Honda N-1 does show that there is still life left in the kei market.

      • 0 avatar
        Varezhka

        Thanks! I had forgotten about the Fiat 126. Didn’t know about Fraser either.

        It has been really sad seeing so many companies leaving this segment lately, though I don’t blame them given how hard it is to make profit here. There’s also been a good amount of pressure lately for the end of Kei class. Maybe the Kei standard just need a little update?

        Honda’s renewed push with its N series is really heartening, and I hope them the best.

  • avatar

    The American Automotive Policy Council will not tell you the real reason American companies have abandoned the Japanese market, Profits!! There aren’t any to be made in Japan for a volume player. Selling Kei cars will only make it worse. The only way to make money is by selling low volume niche products. VW enjoys some branding power and higher Audi sales more than offset negative margins on the Up. Det 3 and Hyundai/Kia do not enjoy the same branding power. H/K has completely left the market and Det3 have reduced themselves to selling low volume niche products. Toyota with nearly 50% market share has lost $13B in Japan over the last four years.

    Toyota Japan financial results
    FY2009 – Yen 237.5B loss ($2.96B Loss)
    FY2010 – Yen 225.2B loss ($2.81B Loss)
    FY2011 – Yen 362.4B loss ($4.55B Loss)
    FY2012 – Yen 207.0B loss ($2.58B Loss)
    There are no profits to me made so there is no point in expanding. The other factor restricting sales is prices. A base Chevy Sonic sells for $24,000 in Japan. How is that going to compete with a $18,000 Auris(Yaris)/Fit? Even the Fit hybrid costs less than a Sonic. For comparison how many Corollas would sell in the US if a base Corolla cost $24,000 while the Focus,Cruze and Dart sell for $18,000? Before you argue that the Sonic is an import in Japan while the Corolla is made locally in the US, 50% of Corollas sold last year in the US were imported before the Mississippi plant came online. A base Camaro costs $55,000 in Japan!

    It is good to see VW taking the charge and expanding into Japan. In a declining market, these sales have to some from somewhere (Most likely Toyota with 50% market share) further increasing losses for Japanese automakers in their home market. I want to see the Det 3 collaborate and create a joint platform Kei car and produce it locally in Japan to compete with Japanese automakers if only to f$^& with Toyota.

    The VW communications director is not stupid. He is not going to say anything negative about Japan if he intends on selling cars there. The same reason why Japanese Auto officials haven’t been talking smack about Chinese officials fueling riots in China against Japanese automakers.

  • avatar
    Pch101

    The ACEA (European Automobile Manufacturers Association) complains about Japan’s non-tariff barriers, and opposes a free trade agreement between the EU and Japan.

    http://www.acea.be/news/news_detail/speaking_points_on_the_launch_of_free_trade_talks_between_the_eu_and_japan

    Volkswagen AG is a member of the ACEA.

    I really don’t understand TTAC’s compulsion to spin this NTB story as a uniquely American complaint. The Americans and Europeans have very similar complaints.

    Japan signed on to the international agreement for harmonized standards (which is essentially an agreement to apply EU standards outside of the EU). Yet Japan continues to maintain its own standards with its own type certification process, which slows and complicates the process of getting imports approved for sale in Japan. Again, why TTAC chooses to misrepresent the grievances, I don’t know, but again, the Europeans are making largely the same complaints about Japan’s approval processes that the Americans are.

    • 0 avatar

      PCH101: You usually make smart and well informed remarks, but the arcane area of type approval does not appear to be your forte. To explain it would fill many pages, I won’t. Recommendation: Stay away from it.

      • 0 avatar
        Pch101

        “the arcane area of type approval does not appear to be your forte.”

        Apparently, type approval isn’t either the ACEA or the EU’s forte, either, since they’re both complaining about it.

        The fact is that Japan signed the UN (read: EU) agreement for type approval, but Japan doesn’t apply it to completed cars.

        Japan will not approve mass market cars for sale until they have been type approved. That requires an inspection conducted by Japanese authorities that does not necessarily happen in a timely manner.

        In addition, automakers want to compete based upon innovative features. The Japanese system is not transparent to the European automakers, so they can’t readily obtain approvals for changes that will make it past type approval, since there is no clear path about how to lobby for them.

        In business, time is money. Slowing down the process of bringing vehicles to market is a non-tariff barrier. That time raises costs, plus it provides domestic competitors with a handicap, since delays can buy them to time to prepare a response.

      • 0 avatar

        If you insist to walk into a mine field … but where to start?

        First off, UNECE is not “essentially an agreement to apply EU standards outside of the EU.” Far from it. UNECE itself was born long before there was an EU, even before there was modern Germany. It was founded in 1947, with signatories such as the U.S. and Russia. The World Forum for Harmonization of Vehicle Regulations, established in 1952, led to the 1958 agreement for a type approval framework, again, under United Nation auspices, but without the U.S.. Granted, the framework philosophy has its roots in Europe, actually in the principle of Germany’s “Allgemeine Betriebserlaubnis,” but saying that the framework applies EU standards outside of the EU would be like saying that Greek and British law applies to the U.S., just because the U.S. is a democracy that follows the common law principle.

        Second, the unwieldy titled 1958 “Agreement concerning the adoption of uniform technical prescriptions for wheeled vehicles, equipment and parts which can be fitted and/or be used on wheeled vehicles and the conditions for reciprocal recognition of approvals granted on the basis of these prescriptions” basically is a framework for the mutual acceptance of type approvals of car parts and components, and in that, mostly for replacement parts. The UNECE agreement does not govern type approval for whole cars. Basically, if Belgium says that the Frammel XYZ widget is ok for your 2013 Borgward, then that widget is ok with all other agreement signatories – if and only if they have also adopted the respective UNECE regulation pertaining to that widget. You follow? I warned you it’s arcane.

        Third, there are more than 100 regulations, and each signatory is free to adopt as many as seen fit. Tracking which of the more than 100 regulations is adopted in which of the more than 50 signatories is challenging even for a highly trained expert.

        Fourth, as noted above, the UNECE framework is not about whole car type approval. A car that is street legal in Europe is not automatically street legal in other UNECE states. The separate EC Whole Vehicle Type Approval (ECWVTA) provides that a car that is street legal in Belgium is also street legal in Austria. But not in Australia. ECWVTA is a EU rule, just like a visa to Germany is valid in all Schengen states. There are ongoing discussions to expand the UNECE type approval of vehicle systems and separate components to whole cars, but this seems to be far away. You can’t blame Japan, Australia or any other non-EU country for signing UNECE and then demanding separate whole car certification. It is not in the scope of the 1958 UNECE agreement.

        Fifth, from an American perspective it is highly dangerous to use the certification issue as proof for a non tariff barrier or a closed market. The U.S. has chosen to stay outside of UNECE et al and has a completely different regimen. If separate certification is used as a closed market argument, then the U.S. would be the most tightly closed market of all. Careful, mines.

        Sixth, I have the feeling that the answer might be too complex for a short comment. I think it is worth an extra article. Stay tuned.


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