By on January 13, 2010

They all qualify. Picture courtesy

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?

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10 Comments on “Trade War Watch 9: SECSTATE Disses Japanese C4C...”

  • avatar

    The entire cash for clunkers program was a big waste of taxpayer dollars.  It caused a momentary uptick in vehicle sales which will be followed by another sorry year.  What about all those cars taken off the road through the program and destroyed?  Wouldn’t it have made more sense to give them to people who drove even worse cars?..the cars that were too old to be eligible for the program.  You know the cars I’m talking about.  The guy with the 1980 Lincoln that is belching the blue smoke in front of you…causing you to have to make a dangerous pass to get around him or choose and alternate route.

  • avatar

    forget about c4c for a minute…  the japanese car market is extremely closed.  Every single car that is imported has to be individually inspected, and since no country in the world is willing to accept any other country’s safety standards, the cars all have to be modified.  It leads to extremely high costs to uniquely tool parts just for Japan, or England, or the Middle East, etc etc etc.  Cars that are sold overseas, especially in Japan, tend to be the larger more profitable cars, where they will fetch enough money to actually make a profit.
    Having said that, it was disingenuous to participate in US c4c program, and exclude us from their program.

    • 0 avatar
      Paul Niedermeyer

      Can you verify that? GM had a deal with Toyota back in the eighties to import cars on a large scale. The Japanese turned up their noses at the Cavaliers, for good reason.
      The German brands have had a healthy import business for decades in Japan. The Japanese just aren’t keen on US cars.

  • avatar

    How naive for our elected officials to believe that any other country will play fair. They’re out to protect themselves, something we should have learned. When you can’t sell them rice from the U.S. ,what don’t you get?

  • avatar

    Even Americans didn’t want American cars during our C4C feel good boondoggle…why would we expect the Japanese to?

  • avatar

    Paul is right, Cardeveloper is wrong.

    Since no country in the world is willing to accept any other country’s safety standards, the cars all have to be modified.  It leads to extremely high costs to uniquely tool parts just for Japan, or England, or the Middle East, etc etc etc. Baloney. There are UNECE regulations that avoid just that.  Japan adopted 40 of them, the USA none. A car that is legal in Estonia is legal in Greece. If the USA insists on standards different than the rest of the world, then don’t complain about not being invited in.
    Cars that are sold overseas, especially in Japan, tend to be the larger more profitable cars, where they will fetch enough money to actually make a profit. Baloney again. The best selling imports in Japan are VWs. American cars simply aren’t attractive in Japan or in Europe, even if made compliant. Even a Yakuza would wrinkle his nose at a Caddy and pick a black Mercedes instead. The USA isn’t big in exports. Even in the boom year 2007, only 16% of the car production was exported. Mostly to NAFTA Mexico and Canada. Less than 3% of the US production was exported to Europe, many of them “re-exports” such as the BMW Z4.

  • avatar

    Seems like it’s really a case of the US whining that “We want our special dispensation to get around your rules (low volume not requiring homologation, etc), and also want you to relax this other rule that everyone else has to follow.”
    Besides, how dare the Japanese actually put a requirement in that would require that the environmental component of the incentive be met, unlike the US C4C greenwashing.

  • avatar
    Mr Carpenter

    Even crappy, broke Chrysler could have set their faces to the task and taken the decision to import FIAT 1.4 litre Euro V compliant engines and install them in the Dodge Caliber and turbo versions for the Dodge Journey MPV’s/tall wagons, and sold them through FIAT in Japan, had they wanted to.  (Yeah, sorry, I know – the Journey’s are built in Toluca, Mexico…. but the Caliber is built in Belvedere, Illinois)  Aren’t all NAFTA cars “counted” as “American” by the selfsame government whining over this (the US government)?

    FIAT (tries to) sell cars in Japan right now.

    Surely huge GM could have tried selling Mexican built Aveo’s in Japan.  Well, that’s about as close as they’re going to get…. unless they think they can start selling Lordstown Ohio built Cobalts with the smallest possible engines.  They already (attempt to) sell Corvettes, Trailblazers and Camaros there so supposedly have a dealer network (?)

    No, in reality this is just an incompetent government hack toeing the party line and trying to cut out the Japanese competition in the USA. 

    Obviously it’s similar tactics seen by such stand-up governments as seen in Russia, China, etc.

    In one sense, the Japanese can’t complain since for decades, they too have played protectionism with their markets!  I guess what goes around comes around. 

    The ironic thing is, Japan Inc has come around to building a lot of cars where they are sold and has put a LOT of money into the USA (with car factories, and parts factories for two out of God knows how many investments), as well as being very supportive in buying up US DEBT and bonds when arm-twisted to do so. 

    Given that the Chinese and Japanese and British are the three largest holders of US debts, and that all 3 have reduced how much debt they’re willing (or in the case of the UK, able) to buy, this is the mafiosa style “payback” from Obama and co.  I dunno…

  • avatar

    Rewind 45 years.

    Japan sold very few cars in the USA.  Nothing they built was designed for the needs of our market.

    They learned what our market was looking for, even to the extent of redefining the “American family sedan” because they flat did a better job of reading our market than we did.

    Debtroit never tried to understand the Japanese market at all.



  • avatar

    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

  • avatar

    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.

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