By on December 17, 2012

For long, Detroit automakers explained their miserable sales numbers in Japan with somersaulting logic: “Our sales numbers are so miserable in Japan, because the Japanese market is closed to imports. Proof: Our miserable sales numbers.”

German carmakers in the meantime, notably Volkswagen, do not complain at all. They control 80 percent of Japan’s growing import market. Volkswagen’s small Up! turned into an especially hot seller, and Volkswagen’s executives in Japan emphatically deny that the market is closed.

Now, the Detroit Three are back in Japan with a revolutionary strategy: Offer cars the market wants.

In Japan’s case, that’s smaller cars. “Ford Motor Co., General Motors Co. and Chrysler Group LLC are gearing up to release smaller, more fuel-efficient vehicles here to better compete against German automakers,” writes The Nikkei [sub].  If they fail, they can always go back to claiming that the market is closed.

  • At Ford, where big SUVs like the Explorer and Escape account for 80 percent of all of the 3,648 units the company imported to Japan this year, the big brutes will be joined by the Focus five-door hatchback next summer. Who knows, with a little success, maybe Ford will spend the money on a Japanese website with a menu and headlines in Japanese …
  • GM hopes the Cadillac ATS, to be brought to the country in March, will sway Japanese customers. Cadillac needs a little help with only 1,122 sold so far in Japan. Even the Yakuza are beginning to think that Escalades are too ostentatious, a contact in Kabukicho tells me.
  • Chrysler will launch the 0.9-liter Ypsilon compact this Saturday, its first new model in the Japanese market in four years. Now wonder the brand sold only 592 cars in Japan this year.

Together, the Detroit Three sold a total of around 12,000 vehicles here in the first 11 months of 2012,  something they clearly want to improve on in the coming year. German brands sold more than 160,000 cars so far this year in the allegedly closed Japanese market.

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68 Comments on “Detroit 3 Return To Japan With A Revolutionary Strategy...”


  • avatar
    Sky_Render

    Where’s that Mustang image from? Ford’s Japanese website?

  • avatar
    Landcrusher

    They should make a scaled down, BOF SUV/PU platform with Japan friendly dimensions, efficient engine, and classic American styling. Then they should sell it here as well! Out Hilux the Hilux! Just start with the luxury version for low volume profits.

    Am I crazy?

    • 0 avatar
      KixStart

      Yes but that doesn’t mean your plan won’t work.

    • 0 avatar
      tatracitroensaab

      lol yes youre crazy ;) the industry is moving out of regional variants to get economies of scale for a reason. it would still be awesome.

      So what, youre looking for a pimped out Ford Ranger?

      • 0 avatar
        Landcrusher

        Kix,
        Touché!

        (Yes, I am aware the French have made many contributions to civilized culture, but don’t let them know I said it.)

        And, like the ranger, only really more like the Hilux but with luxury options and SUV variant. Did they ever base an SUV off the Hilux?

      • 0 avatar
        outback_ute

        @Landcrusher – the original 4Runner was based off the Hilux, and the current Hilux has the Fortuner.

      • 0 avatar
        Landcrusher

        Yes! That’s right.

        Okay, not really retro, but classic American looks. Boxy with rounded corners. Bronco/S10/ranger kinda stuff. Metallic paint in and out with nice pleather or leather and chrome. V8 and 4wd option for the top end, and whatever reliable plant that they would want on the bottom end.

        Simple, reliable, sensible, American. Hose out interior. Convertible SUV 2+2, hard top SUV, pick up.

        Several reasons to buy. Get the 4wd and crush your neighbors drifter! Wear a cowboy hat. Delivery. Whatever.

    • 0 avatar
      racer-esq.

      The Japanese have beaten you to classic American styling with Japanese dimensions:

      http://www.damd.co.jp/products/honda/acty01_lb.html

      http://www.damd.co.jp/products/suzuki/every01_lb.html

  • avatar
    olddavid

    “In other news from the domestic makers, TTAC has reported that the turkeys given away at Thanksgiving and Christmas are a thinly-veiled attempt at bribery by an increasingly desperate domestic auto industry.” Give it a rest. Or put someone else – without angry white man syndrome – in charge. Leave the spin to the professionals.

  • avatar
    MeaCulpa

    So when I check this thread tomorrow I’m guaranteed 25+ posts slamming the author for being anti american and/or the Japanese for discriminating the rest of the world.

    • 0 avatar
      Chicago Dude

      Well….

      The author links to a previous TTAC article by the same author, which links to another previous TTAC article by the same author, which links to a press release by a Detroit 3-backed research center, which links to a study by a self-proclaimed independent think tank which references some non-tariff barriers to the Japanese market. Once I had that, it took a little more Googling to find out what exactly the complaints were.

      It seems that the Detroit 3 are mostly complaining about the engine displacement tax rates which heavily favor tiny engines (as in really really really really small) as well as the type certification system and the sales amount at which more stringent certification kicks in. Apparently the cost of the more stringent certification is so high that unless you are positive that your sales will increase by an order of magnitude it is better to stay small and use the simpler and cheaper certification system.

      Now that the Detroit 3 have competitive small engines and small cars I would bet that the complaints out of Michigan die away.

      • 0 avatar
        Pch101

        “It seems that the Detroit 3 are mostly complaining about the engine displacement tax rates which heavily favor tiny engines (as in really really really really small) as well as the type certification system and the sales amount at which more stringent certification kicks in.”

        The Europeans also allege that the type certification process in Japan is used to stifle the pace of product innovation. It is not just the Americans who are doing the complaining.

      • 0 avatar
        wsn

        Granted, small engine bias is a barrier. But consider that:

        1) GM fans claim that Buick is comparable to Lexus. And Lexus don’t use tiny engines. So, this barrier doesn’t apply. Let’s see how Buick slaughters Lexus in Japan.

        2) GM fans claim that Volt is an electric car. An electric car shouldn’t have any trouble with a displacement barrier, right? Go crush whatever competition out there.

      • 0 avatar
        Xeranar

        Pretty much the NA continent is a world unto itself in terms of engineering. Nobody at GM feels the need to crack a country that buys a fair number of cars but only with extremely small displacement engines and then engineer a smaller chassis than the sub-compact to win share. As it stands up until about 3-5 years ago the domestic sub-compacts were either imported or never exported to Japan. The Ford Ka was nice and small but even that I believe was too large for Japanese Kei-car status.

        More or less Japan is a closed market in a complicated regulatory way that wasn’t so much intentional as it just worked out that way. No mecha-conglomerate is going to want to chase down market share if they essentially need to build a new industry.

      • 0 avatar
        Pch101

        “More or less Japan is a closed market in a complicated regulatory way that wasn’t so much intentional as it just worked out that way.”

        The Europeans contend that the type certification process as used by Japan is deliberately opaque. They would like to introduce high-tech gear in their luxury cars, but there is no clear, user-friendly process for getting those items approved.

        Since a model can’t be sold in Japan without first being approved in advance, the type certification process slows things down. In contrast, the US lays out its rules upfront, and then will only deal with violations retroactively if it is found that the rules weren’t followed.

        The Hyundai EPA episode illustrates how this works; Hyundai was able to sell the cars based upon their own certification that the mileage figures were correct, and only had to deal with it after the fact once it was determined that their mileage figures were wrong. The production process is handled in a similar fashion; the manufacturer begins by getting the benefit of the doubt.

      • 0 avatar
        musiccitymafia

        Interesting way of looking at it. Planning instead of reacting.

  • avatar
    Adamatari

    To be honest, I think they could have a steady (though limited) business selling their American cars, like the Mustang, as American cars. Despite the costs, Japan does have a car culture and there are plenty of American car fetishists – just read Gunsmith Cats and you’ll see that the Mustang is loved even outside US borders. The Detroit automakers don’t have much of a presence (like Suzuki here) and haven’t really tried to make them appealing for overseas markets (they don’t even make RHD Mustangs). Ford could EASILY sell a few Mustangs if they made a token effort (at least up to now – not so sure going into the future what with gas prices and economic malaise).

    There’s also the gangster market, which Cadillac has tied up in the US but which is basically owned by Mercedes in Japan. The CTS might be able to rack up a few sales if aimed it right.

    Seriously, they just aren’t even trying.

    • 0 avatar
      Lumbergh21

      Easily fits two executives…
      In the trunk

    • 0 avatar
      Freddy M

      Or with Bubblegum Crisis where Sylia drives a classic Mercedes SL. Kenichi Sonoda is a true gearhead.

    • 0 avatar
      MeaCulpa

      A Yakuza member that buys a tarted up pickup with more plastic chrome then the entire bathroom section at the local DIY building store, rather then a left hand drive S, deserves his untimely death and loss of pinky.

    • 0 avatar
      luvmyv8

      I love Gunsmith Cats… where else can you see a Mustang II Cobra with a Boss 302 engine in it instead of the weak kneed ‘F code’ 129 hp 302?

    • 0 avatar
      ranwhenparked

      Oh, they do that too. Taking a look at the ca. 12,000 cars the Big Three sold there this year, you see that they have been focusing on what are very much niche models for Japan. There will always be some customers, everywhere in the world, that want a big SUV or RWD muscle car, and the Detroit(and Dearborn and Auburn Hills) Three will always be there to provide that, but if they ever want to really hit the big time in the Japanese mainstream, they need to offer the sorts of products that have a chance at serious volume there.

  • avatar
    tmkreutzer

    This new approach may be better but I doubt that the American brands will become huge sellers anytime soon. I don’t think the average Japanese consumer is even going to shop them when they are looking to replace their family car.

    The Japanese car marketplace is terribly complicated. Most families only have a single car and it needs to be drivable by every licensed driver in the family. My in-laws, for example, will never purchase a large sedan because my mother in law doesn’t feel comfortable behind a big hood. It’s a non starter.

    While a lot of men would love to have a big sedan or a performance car, reality kills that idea before it takes root. If you are a young, single man in charge of your own finances, chances are you don’t have a job that would allow you to spend the kind of money it takes to buy a new American made car. If you are married it doesn’t matter what you want, your wife is going to decide what your family buys.

    VW’s cars work in Japan because they aren’t too big and women generally like the upscale image driving a German car conveys – it’s a win win compromise. The big three need to look at how to market to women. Design and sell cars that gets the men to bring their wives to the showroom – once they are there then have to sell to the women. If you don’t have a product they want, you are done.

  • avatar
    Rday

    The Japanese public are just too savvy a group of consumers to be lured into the tentacles of the Detroit Turdheads. It is hard to believe that we have these idiots in Detroit representing the best that America has to offer. Just incredible. We are fast becoming a second world nation.

  • avatar
    Pch101

    “German carmakers in the meantime, notably Volkswagen, do not complain at all.”

    The German automakers all belong to the ACEA. The ACEA complains about non-tariff barriers, and opposes a free trade agreement between the EU and Japan.

    The EU also complains that Japan maintains non-tariff barriers for cars and other products, commissioning lengthy reports that document their grievances.

    Why you continually present this as a uniquely American complaint frankly baffles me. You can dispute their allegations if you wish, but you don’t get to invent your own facts.

    • 0 avatar
      th009

      And the CEO of a German manufacturer would never disagree with the head of ACEA … would he?

      Why you continually complain about the Japanese barriers but ignore the non-tariff barriers in (United States of) America frankly baffles me.

      • 0 avatar
        Pch101

        “Why you continually complain about the Japanese barriers but ignore the non-tariff barriers in (United States of) America frankly baffles me.”

        You apparently missed my point, which was that Mr. Schmitt falsely claims that the German automakers are perfectly happy with the Japanese trade situation. The reality is that they aren’t.

        As for US “trade barriers”, the US market has no shortage of imported cars. Foreign producers maintain strong market share and high sales volumes here.

        Those same foreign producers are so eager to do business here that they’ll often sell their cars for lower prices in the US than they do at home, all while still turning a profit.

        You’re making mountains out of a molehill. US standards aren’t a big deal; those standards come attached to a combined market of 330 million Americans and Canadians who are happy to buy and lease plenty of cars. The price of admission isn’t high when compared to the number of units that can be sold here. No foreign automaker has the same opportunity to amortize those costs in Japan; they have to tack on a price premium in order to cover the added expense, which ensures that their volume and share will remain limited.

      • 0 avatar
        th009

        What you really saying is “hey, non-tariff barriers are OK if your market is big enough. But if you are smaller than us, you better drop your barriers!”

        The Germans are successfully selling a respectable (and growing) number of cars in Japan. There are costs to selling in Japan, but it doesn’t prevent companies from operating and selling there.

      • 0 avatar
        dtremit

        “The Germans are successfully selling a respectable (and growing) number of cars in Japan. There are costs to selling in Japan, but it doesn’t prevent companies from operating and selling there.”

        The fact that they’re selling cars doesn’t make it a level playing field. Take Volkswagen as your example. Are they selling cars in Japan? Yes, probably because they’re perceived as a foreign, premium offering.

        Are they able to compete with comparable cars from Japanese manufacturers? Not even close. The proof is in the prices.

        Consider for a moment the Volkswagen GTI and the Mazdaspeed 3 (aka Mazda3 MPS/Mazdaspeed Axela). Two cars that are toe to toe in pretty much any comparison, and compete squarely with each other globally. Notably, they have the same basic spec everywhere, so they’re easy to compare.

        In the US — an export market for both manufacturers — their prices are identical. Both start at $24k.
        Ditto for Australia — same situation — both are within AU$1k. (AU$43k for the GTI, AU$42k for the Mazda).

        In Germany — Volkswagen’s home market — same deal. Both cars start at €28k.

        How about Japan? The Mazda is ¥2.7M. The GTI? ¥3.7M. A 38% premium — unique to Japan.

        It’s not tariffs, but clearly the cost of selling cars in Japan is much higher for Volkswagen than it is for Mazda. Does that sound like a level playing field?

      • 0 avatar
        musiccitymafia

        Your example misses the profit maximization notion and only looks at volume as the goal. In a fairly inelastic market the price is set so as to maximize profits.

      • 0 avatar
        Pch101

        “What you really saying is “hey, non-tariff barriers are OK if your market is big enough. But if you are smaller than us, you better drop your barriers!”

        You really ought to work on your reading skills, because you continually misinterpret what I’m saying.

        Every nation that produces cars has some sort of barrier. Some barriers are more formidable than others. This is a function of how nations deal with each other, and there is no need to interject a faux moralistic argument.

        US barriers are not a big deal for large producers to deal with. Their cost per unit is low, and perhaps more importantly, they are predictable and subject to negotiation.

        The challenge for foreign automakers when dealing with Japan is the degree of uncertainty created by the barriers. It’s difficult to maintain profitability and build share when the regulators gum up the works. That situation is even worse when the government in question makes it difficult to negotiate what those rules are.

        Mr. Schmitt is working overtime trying to convince you that the Europeans love how the Japanese manage trade. I have no idea why he wants to convince you of this, but his claims are bogus. The European automakers don’t want an FTA with Japan because they believe that the Japanese will get the better end of the deal.

        The EU’s barrier is easy to quantify — the 10% tariff is the most obvious — while Japan’s regulatory ambiguity is not something that is easily dealt with by those who are stuck with it. I don’t particularly care that Japan has non-tariff barriers, but there’s no reason to stick your head in the sand and deny it, either.

      • 0 avatar
        th009

        ACEA (read: Sergio Marchionne) complains about the Japanese non-tariff barriers. The German manufacturers don’t; they just get down to building a business in Japan. Then again, Marchionne also complains about the EU and every other government that doesn’t shower Fiat with gifts.

        You again say US non-tariff barriers are OK because the US market is so big that it’s OK to tell everyone to adapt to the US standards. That’s fine, that’s the stereotypical American view, but it is certainly not objective.

        I don’t particularly care that United States has non-tariff barriers, but there’s no reason to stick your head in the sand and deny it, either.

      • 0 avatar
        Pch101

        “You again say US non-tariff barriers are OK because the US market is so big that it’s OK to tell everyone to adapt to the US standards.”

        Again, you really, really need to work on your reading skills.

        I can see that you are really eager to turn this into some sort of us versus them pissing contest. Unlike you, I’m not.

        I’m simply looking at this as a business problem. Every company has to contend with a variety of challenges, including regulatory matters.

        And the consistent complaint about Japan is the difficulty that foreign auto companies have in dealing with Japan’s processes for approvals. A producer selling in the US ends up with a WYSIWYG situation, so it is manageable and predictable; it costs money, but they can predict and manage those costs, plus they can negotiate with the feds so that the requirements aren’t too onerous. The retail price of cars in the US reflect the relative ease with which these US rules can be managed; if US rules were that much of a problem, then the foreign automakers wouldn’t be able to sell cars for the relatively low prices that they do.

        In Japan, it apparently is not, which makes it more difficult for companies to innovate and compete based upon new features. On the whole, the US market is a lot more attractive. It’s bigger, it’s growing and it’s manageable. There is a reason why the likes of Hyundai are going balls out to build a market here, while effectively giving up on a place much closer to home.

      • 0 avatar
        th009

        And there is the “big market” argument again; you don’t seem to be able to do a post without it.

        My point is simply that US has non-tariff barriers as well. You don’t seem to be able to admit to that.

        And I’d like to see you negotiate an exemption to DOT FMVSS or EPA emissions regulations, like you imply is possible.

      • 0 avatar
        Pch101

        “My point is simply that US has non-tariff barriers as well. You don’t seem to be able to admit to that.”

        Your reading problem is becoming tedious. This is what I said previously. Read very slowly:

        “Every nation that produces cars has some sort of barrier.”

        What do you think that this means, exactly?

        My point is that relatively speaking, US barriers are chickens**t for a major producer. They are easy to deal with.

        “And I’d like to see you negotiate an exemption to DOT FMVSS or EPA emissions regulations, like you imply is possible.”

        Again, that reading problem.

        The US doesn’t make auto regulations in a vacuum. The industry players lobby and negotiate before they are imposed. The rules ultimately reflect a compromise between the various agencies and the automakers. And then once those rules are laid out, producers can build and sell product without getting advanced approvals for every model that they offer.

        One of the complaints about Japan is there is no such haggling. Apparently, obtaining approvals is not straightforward and the producers don’t have much, if any, leverage to negotiate them. And since nothing gets sold without first getting approval, that becomes a problem.

      • 0 avatar
        dtremit

        th009, I think part of the problem is that you (and Mr. Schmitt, to be fair) are conflating market barriers in general with non-tariff trade barriers. They are not the same thing.

        Any market has barriers to entry. As many have pointed out, the barrier to entry in the US car market is somewhat higher than many other markets in the world, since US standards aren’t harmonized with what passes for international standards. So cars must be certified specifically to meet US standards.

        That is a barrier to entry, and it is particularly a barrier to cars that would sell at a low volume in the US. However, it is not a non-tariff barrier, because it does not affect imported cars — or import manufacturers — disproportionately.

        For example, take one of Mr. Schmitt’s favorite examples, the Opel Junior/Allegra. GM won’t be bringing it to the US because it would be too expensive to harmonize it to US standards. It doesn’t matter if they build it in Michigan as a Chevrolet — it would still have to be harmonized. If the regulation applies no matter where you build it or who builds it, it’s not a non-tariff barrier.

        You rightly identify EPA emissions and DOT FMVSS regulations as market barriers. But they are not non-tariff trade barriers.

      • 0 avatar
        th009

        @dtremit, by the same token, Japanese safety standards and the tax regime that favours kei cars are not non-tariff barriers, either, as they apply to domestic manufacturers as well.

      • 0 avatar
        Pch101

        Design regulations can serve as a non-tariff barrier because the domestic producers will already have their operations optimized for compliance, while the importers will have to rework products in order to comply.

        The US standards are a barrier to smaller producers. They probably do help to keep the likes of Peugeot out of the US market (although Peugeot would have probably failed here, regardless, since they tend to build cars that Americans don’t want.)

        But design regulations are no barrier at all to the majors. They sell more than enough volume to cover the cost. If the US was a tiny market, then these differences would present a considerable problem and probably drive out the importers, since compliance would cost too much and generate too few sales to be worth the bother.

        On the whole, the US doesn’t present much of a regulatory challenge. Mr. Schmitt’s efforts to describe the US as a difficult market are betrayed by the sales volumes, market share and product pricing of these foreign producers. If his claims were correct, then sales would be a lot lower and the prices much higher than they are now.

      • 0 avatar

        Th009, The US does have a lot of barriers for imports in addition to certain tariffs. These trade barriers are predefined and are set in a way that is fair and open to anyone willing to do business or export to America. Toyota for example being aware of these regulations would design the Yaris in a way it can comply and once the first few are certified, they can ship them in at their will. A Chevy Spark or a Buick Encore imported from SK would have to comply to these same regulations, tariffs and hoops as a Yaris from Japan or an Audi from Germany. The barriers put forth by the Japanese are less transparent and cars imported to Japan could routinely be halted at ports for manual inspections that could take weeks. All these dramatically increase costs for anyone willing to import to Japan. Case in point, the B Segment cars. Toyota can ship the Yaris halfway around the world and sell it in the US for $14,000 undercutting the Sonic and Fiesta in price. Chevy however would have to price the Sonic at $24,000, a 70% premium over the Yaris in Japan though it is shipped from neighboring South Korea. Japanese automakers who actually make up most of the imports into Japan do not face the same challenges and can price their cars at reasonable levels or get them to market as soon as they want.

        The question we need to be asking is why are the costs so high that import automakers are forced to sell their cars at such a high premium. Its easy to say GM will remain a non player in Japan since they only sell Camaros, Corvettes and Cadillacs, which is true. Much harder to figure out why the worlds top auto-makers have pretty much confined themselves to niche products in Japan. Everyday cars like the Fusion, Cruze and Equinox would be priced 50% higher. They stand no chance against cheaper Japanese brands. Niche models like the Camaros, Mustangs and CTS-Vs have a better chance since there isn’t a Japanese alternative.

        Detroit automakers have for the most part taken the high road. The only noise/complaining you hear is from lobbying groups or fanboys like myself. If it is any solace to fans, know that GM Japan, selling less than 5000 cars is profitable while Toyota Japan selling 2.5M cars a year lost $13B in japan over the last 4 years. Toyota in Japan loses 3 or 4 times as much as the money pit called Opel.

  • avatar
    philadlj

    Through a trick of the eye, I thought that screengrab was touting 42 MPG for the Mustang 5.0…which would be a bit of a stretch!

  • avatar
    28-Cars-Later

    wrong post, please remove

  • avatar
    lon888

    I remember reading an article years ago about the Big 3′s foray into Japan. It was quality (or rather the lack of) that killed Detroit in Japan. It took only 6 hours to correct the quality defects on a VW, whereas it took over 40 hours to make a Cadillac sellable. Detroit learned the hard way the Japanese really, really like solid, reliable cars (duh!!!).

  • avatar
    niky

    Expensive type certification shoukdn’t be a barrier if you’re committed to the market. The problem is the lack of commitment. If you’re not willing to lose money on certification in Japan, as you already lose money in the countless crash tests and emissions compliance hoops you have to jump throug to sell in the US and Europe (and the separate hoop that is California alone), then why bother selling in Japan at all?

    Why not just complain about it, instead?

    • 0 avatar
      Pch101

      “Expensive type certification shoukdn’t be a barrier if you’re committed to the market. The problem is the lack of commitment.”

      You’re confusing “commitment” with “a passion to lose money”. There isn’t enough opportunity for market share to make it worth while.

      Theoretically, Japan is a party to the UN agreement that agrees to common type certification practices. In practice, they don’t comply with it. Their lack of transparency increases costs, which effectively serve as a barrier that protect the market.

      The US uses a voluntary compliance system. First, they negotiate the rules with the automakers, then they allow the automakers to do whatever they want, just so long as they comply with the rules. Since the automakers contributed to crafting the rules, complying with them is not difficult. They can start selling cars without the prior approval of a bureaucrat who can slow down the launch schedule.

      For a volume seller, the US system is vastly preferable; no bureaucrat on a perpetual lunch break is going to prevent a car from being introduced. And unlike Japan, the US offers a large and growing market, which makes it worth the effort and expense.

    • 0 avatar
      MeaCulpa

      Well frankly there’s no extra “hoops” at all in the EU as the European standard is the global standard, some countries feels the need for separate regulation deviating from global standards, historically demanding rubbish like sealed beam headlights and allowing red turn signals for some godforsaken reason.

      • 0 avatar
        th009

        Exactly. Different lighting standard, different emission standards, different bumper standards — and additional crash tests. Some things are voluntary, most things are not. And this is a big part of the reason we only get a limited selection of European models, and limited powertrain options for the models that we do get. (Yes, dealer inventory is another factor.)

  • avatar
    SherbornSean

    Personally, I would do the opposite. A Focus, Cruze or Dart will never be able to beat the Japanese on their home turf by enough of a margin to actually convince new car buyers.

    GM should sell the ATS, Camaro, SS, and Enclave. Ford should sell the Mustang (V8 only), F-150 and Focus SRT. Chrysler should stick to Jeep Wrangler, Viper and Challenger.

    Build a brand that is proudly American, and only sell what the market demands. Never discount. Never apologize.

  • avatar

    For argument sake, lets accept that Japan doesn’t have a closed market. That does not explain the huge price disparity between Japanese and American cars in Japan. You can buy a Japanese car in the US for far less than a competing American model. For example, the Yaris, Corolla and RAV4 are priced thousands less than a Sonic, Cruze and Equinox(Source TrueCar). In Japan however, a Sonic costs as much as a RAV4 or 70% more than a competing Yaris. How many Americans would buy a Yaris costing as much as an Equinox, or a RAV4 that is priced more than an Escalade? The Chevy Captiva or Furd Kuga in Japan is more expensive than some Lexus models. A base Camaro V6 for $54,000 anyone? A base Camaro in the US is half the price of a Lexus GS. In Japan, they both cost the same. This also renders the “Taxed according to displacement” argument as pure BS. A V6 Rav4 is much cheaper than a Camaro with the same displacement. A 2.5L Camry is cheaper than a 1.4L Sonic.

    For a site that claims truthfulness, I expect MORE investigative journalism on why the Americans haven’t made inroads into Japan or the price disparity. What we get instead is regurgitated propaganda or hard-ons/orgies with Toyota engineers.

    On topic: The Det3 will not make any meaningful progress in Japan. One would be able to buy a couple of Lexuses for how much an ATS will cost. RHD Vauxhalls badged as Opel can do better. A German badge coupled with RHD is what GM should be selling in Japan.

    • 0 avatar
      wmba

      And I demand more investigative journalism as to why F150s don’t sell in England and the EC. Or Cadillacs, Corvettes, Malibus, Lincolns etc. etc.

      I’ll tell you why. Their manufacturers are regarded as gormless.

      You build sales by appealing to a market. Surprising as it may seem to many Americans, not everyone else shares the American car manufacturers take on taste.

      In order to get around those darn foreigners weird tastes in cars, the US response has always been to set up local factories in faraway lands, and make funny little cars that appeal to local taste, i.e. Ford and Opel. Then send out managers from that mecca of international taste and sophistication, Detroit, to run the operations of the dinky little foreign factories whose inhabitants, for some character flaw or another, prefer real football to the American variety, and cannot name the winner of the last World Series.

      Following this time in purgatory, the budding executives return to the US and get a real job, like running an honest to goodness pickup truck factory, and where the canteen serves real food like hamburgers.

      American car manufacturing has for a century been a parochial exercise developed in isolation from tastes in other countries. The attitude that if it’s good enough for me, it’s good enough for everyone else just doesn’t cut it. Other American products, movies, music, computers, iPods, KFC (ever been to Malaysia?) sell like hotcakes. They meet a need. American cars not so much.

      Instead of blaming foreign standards and assuming that a foreign populace would buy US vehicles if they could just be allowed to pile ‘em high on a giant dealer lot in suburban Tokyo, the US manufacturers should get serious and, jeez, you know, cater to local taste. What a concept! Right hand drive is Step 1.

      How did Japan become successful exporting vehicles to North America? Hint — not by exporting Kei cars with RHD to Wisconsin. They adapted pretty quickly to market conditions, and became so successful so quickly that import quotas were set. They then knuckled under to Reagan and built factories here in North America.

      Seems like a blueprint for US manufacturers to follow if they want to get into the Japanese market, instead of muttering darkly about non-tariff barriers, believing that every Japanese car was funded by some secret Japanese government handout, and a myriad of other myths. In other words, get off their collective duffs and get on with the job of cracking the market.

      That’s if they were serious. They’re obviously not. They just want to complain because flogging cars in Japan isn’t a cakewalk. It takes effort and commitment, not some flash in the pan CEO talking big and the next quarterly report. So far as ACEA is concerned, guess who runs that? The well-known automotive genius Sergio, who can’t even flog his cars in Europe.

      Japan has car factories all over Europe, and sell only in a mediocre fashion compared to their US success. The cars are generally regarded as dull and non-aspirational there, so sales are so-so. First evidence of Japanese not adapting to local conditions. So they’re not invulnerable. However, I don’t know of a single Euro car factory in Japan, BUT there are all sorts of Euro and US component suppliers there. VW sells a few cars there because at least their offerings have some similarities to Japanese cars in terms of size.

      If all the hand-wringing of the US and European car manufacturers about non-tariff Japanese barriers could be summed up in a word, I’d say: jealousy. They’ve been beaten at their own game and like rival siblings, they enviously look over at their brother’s plate and yell, “Mom! It’s not fair, he’s got more than me!” And she replies, “Well, he’s all tired out from doing his chores, so I gave him a bit more. You do your share, and there’ll be more for you, too.”

      There is no substitute for hard work other than blind luck and a lottery ticket.

      Now, if an analysis shows that spending money to really get into the Japanese market isn’t worth it economically, and that’s entirely possible, then the foreign car manufacturers should just shut up, quit whining and complaining, and get on with their existing business.

      Over and out.

      • 0 avatar
        MeaCulpa

        Yes, and Malaysia is truly a shittier country thanks to KFC. KL is still without a doubt one of the places in the world where I could imagine living. I think american companies tends to have a somewhat isolationist view of the world, possibly due to market size, that coupled with some super power hubris tends to throw a spanner in things when dealing with foreign culture and taste.

      • 0 avatar

        The F-150 is not the only car Ford makes. You do realize that Ford is one of UK’s largest automaker, do you? How did they get there? Not by selling F-150s in England. They designed cars that appeal to local markets if they wanted to make it. Now, England’s auto-market is no where near as big as Japan’s, which until recently was the second largest auto-market. So why hasn’t Ford designed cars specifically for the Japanese market?

        “Surprising as it may seem to many Americans, not everyone else shares the American car manufacturers take on taste.”

        No one believes that or has said so. You are trying to build an argument against a claim no one has made. GM is currently the worlds largest automaker with 75% of their sales coming from outside the US. They couldn’t be selling 7 Million cars a year outside the US if they didn’t cater to local tastes. If some among the B&B think all that GM/Ford build are big honking pickups and SUV’s, then the B&B IMO receive too much credit for their supposed intellect. Some of the other myths spread around by Japan fanboys are that Detroit doesn’t build RHD cars when GM/Ford are among the top sellers in England and Australia while Hyundai which sells zero cars in Japan is the second largest in India. The other belief is that most of the cars sold in Japan are Kei cars. Ignoring the fact that any auto-maker could easily build Kei cars if there was a business case for it, Kei cars only make up 30% of sales.

        There is a reason the largest automakers in the world have near zero presence in the worlds third largest auto-market. There is a reason why Hyundai and Kia, that have grown dramatically in the last 4 years have completely abandoned the Japanese market. There is a reason why every “Detroit” car in Japan costs 50% more than a competing Japanese branded car. (A good friend of mine who is modelling in NYC once told me she wants to move to Japan where there is huge demand for blue-eyed blonde girls. I remember her saying American models are paid twice their Japanese counterparts. I guess the same goes for American made cars!)

        It doesn’t matter how many lies and myths are debunked. There are those that continue to either believe or simply repeat the same old lies. For being “Open”, Japanese brands control 95% of their market.

        The Japanese have been never known for their fair business practices nor for honoring trade laws. Their deceptive ways are nothing new. Denying the Nanking massacre or slaughtering millions of whares and dorphins each year in the name of research while secretly sending the meat to fish markets are some examples.

        I know my efforts to throw facts against a baseless argument are wasted. Seriously, anyone who believes “Detroit cant sell in Japan cause they only make large pickups and large SUVs the Japanese don’t want” don’t deserve a reply.

      • 0 avatar
        Dimwit

        Wmba, yes there are barriers to entry. But there’s a large problem… most are not regulatory. And the gov’t can’t magically change them.

        Hyundai/Kia have abandoned the Japanese market. Why? Because sales suck. Why? Because the Japanese don’t like Koreans. Urrrr, that’s not something that easily fixed by fiddling with the standards. It’s the same thing with the Americans. There are long term reputations that hinge on perceptions, and the export of U.S. popular culture hasn’t helped any. Americans are bold and brash and their cars follow. Loud, powerful, large, obnoxious, crude and cheap… oops not so much.

        Funny, that doesn’t sound like a Ford Focus. Nor a Chevy Malibu. But if the cliché isn’t true, then what do you have? A Camry knockoff? Civic wannabees? As Clara Peller said, “Where’s the beef?” There’s very little upside when you’re competing with local market product and you’re neither the best nor the cheapest. Even worse, you haven’t even made a stab at market matching with features like RHD. Even if the regs allowed for some severe savings, do you think that GM could deliver a car to match the Camry at the same price that Toyota can on home soil? Not a chance in hell.

        The only way that there will be any sales in Japan is with unique product that the locals can’t get from their domestics.

      • 0 avatar
        challenger2012

        alluster You are correct about Japan’s closed market. There actually is a real journalist who did research into just the topic we are writing about, now. Google Detroit’s Collapse: The Untold Story. You see a real journalist looking into facts and logic rather than opinions and biases. I suggest people read this article and you will see the difference between someone pushing nonsense vs. facts.

  • avatar
    Turkina

    I believe Ford currently has the most viable products for Japan. The only caveat… They need to sell the cars as Ford Europe, not Ford NA. The Fiesta, Focus, Mondeo/Fusion, and C-Max could compete as higher content European designed cars. With Ford’s hybrids and 1.0/1.6 Ecoboost, they should be okay with the displacement issue. Of course, the Mustang should be around as well, at least the smaller, next-gen Mustang.

    Of course, I can’t comment on marketing ineptness… I just think Ford has the edge on models.

    • 0 avatar
      raph

      “The cars are generally regarded as dull and non-aspirational there”

      ::shrugs:: I’d just like to point out that most americans are dull and non-aspirational.

      and if they are anything but they tend to be medicated until the situation fixes itself.

  • avatar
    KitaIkki

    Fender mounted turn signal repeaters, and black folding side mirrors …

    5 million yen for a GT Premium, at today’s exchange rate, that’s U$ 59,510 …

  • avatar
    henkdevries

    That Ford website is really bad marketing. Maybe to Japanese it can be perceived as arrogant.
    Japanese are really not that good at English.

  • avatar
    Neumahn

    They still don’t get it. The cars have to be ‘cute’ to sell in Japan.

  • avatar
    Landcrusher

    Seriously, guys. It’s not a mystery.

    Yes, market specific standards are less of a barrier for larger markets. It’s just logical. The US rules for auto manufacturers aren’t that big a deal sense the likely players are mega corps.

    The issue with Japan, back to the eighties and before, is that their game playing is much less transparent, and much more subtle. It’s likely improved since the days of Japan, Inc. But it’s still there.

    Ford going into Japan runs into similar problems you would have starting a new manufacturing business by yourself in a state across the country from you. The regulations are often unclear and hidden. The lack of relationships is scary. The local regulators may see defeating you as a career opportunity, etc. OSHA, or any number of alphabets plus state and local could walk in and shut you down and fine you more than you made last year.

    Americans can be rather ignorant of our own foreign relations, but also naive about others. Our cheating is historically a fraction of the crap pulled by countries in general. The Japanese are experts. There is no telling what the results will be so the incentive to try is tiny. It’s a gamble that international relationships will get them to force their own people to let you have a shot at their amazingly nationalistic consumers.

  • avatar
    niky

    I’ve read the arguments about it, and I still don’t get it.

    Well, I mean I get it. But I don’t see it as Japan’s problem.

    Strict and ever-changing regulations impact not only foreign automakers, they impact domestic Japanese automakers, as well. But for Japanese automakers, it is seen as a strength, as it drives turn-over, leading to a huge export market for Japanese secondhands, and driving sales of brand new cars in Japan.

    But then, there are the same sort of issues elsewhere, like in Korea… or in China, where you have a totally different set of issues. Both of which were solved by GM doing what comes naturally when you want to conquer a captured market: BUY IN. Buy into Daewoo. Buy into a partnership with a local Chinese corporation and build your cars on Chinese soil.

    GM tried it before with varying success with Isuzu, Subaru and Suzuki. Isuzu, GM invested heavily in, and it failed. Isuzu now only sells industrial vehicles in Japan. Its passenger trucks are only sold in third-world markets. The Subaru connection was never big enough. In Suzuki, GM had a manufacturer who was very strong in the Japanese market, and which could produce exactly what GM could not for that market. But Suzuki was a poor match for the US market. Its most successful vehicles in Japan and India were ones GM could not exploit for use in America, which is why Suzuki America was stuck with rebadged Daewoos. Suzuki of America’s weakness and eventually failure likely played a big role in GM’s unloading of its big share of Suzuki.

    Non-tariff barriers? Yeah. If you choose to sell under your own nameplate and choose to do it with cars developed for other markets. Hell, Honda can’t even sell the Civic in Japan thanks to those “non-tariff barriers”, but if you’re willing to play ball, the market is there. You just have to put up with low margins and maybe losses for the first few years, but if you produce something the market wants, and you have the right partner, then it’s definitely possible.

    Hell. That’s how GM is doing Korea. And that’s how Ford and GM are doing Brazil, India and the ASEAN. Of course, those are developing markets, and it’s worth doing there. In Japan, the market has already been developed, so market penetration is going to take some big sacrifices and investments.

    The Big Three are ones to talk. The barriers to entry for any brand new automaker nowadays for the US market is so big that you’d need billions to get started. The hundreds of millions squandered on electric start-ups by the US government were a pitiful drop in the barrel compared to what was actually needed to make them succeed.

    • 0 avatar
      Pch101

      “Strict and ever-changing regulations impact not only foreign automakers, they impact domestic Japanese automakers, as well.”

      You’re really not getting it.

      The complaint isn’t that there are rules. (Everybody has rules.) The complaint is that isn’t always clear what the rules are, or how to comply with them.

      And automakers are accustomed to negotiating with other governments, such as the US, in making the rules. They apparently aren’t able to do that with Japan.

      The system is described as being passive-aggressive. Instead of specifically laying out that you may do X but you may not do Y, they don’t really provide clarity about what it is that you can exactly do. They don’t necessarily say “no”, they just don’t give you a timely answer.

      And since you don’t know what you can or can’t do, that leaves you in a very expensive, time consuming limbo that creates uncertainty, reduces profits, and forces you to charge more money for what you can sell. Hence, the barrier.

      • 0 avatar
        niky

        That’s the party line, but again… local collaboration?

        The regulations are black and white. Unless there are regulations you can point to that are not stated.

        Unclear regulations and red tape are the same issues facing automakers in China. But they’ve chosen to play ball by going working with the locals, because they see immense profits. Going after the more difficult, nationalistic and low-margin Japanese market (still in the middle of a multi-decade recession) right now would seem futile, and all this complaining is nothing more than lobbying for Japan to do things the European way, instead.


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