By on May 5, 2012

Imagine what happened if the representative of a large Japanese or Chinese car company would demand that America should close some car factories before easier access to foreign markets would be contemplated. All hell would break loose, and the Seventh Fleet would steam in the direction of the loose cannon – if it is not already there. What happens if the representative of Ford says that Japan should be required to reduce the size of its auto industry before being allowed into regional free trade talks with the United States and eight other countries in the Asia Pacific? Business as usual.

Steve Biegun, Ford’s vice president for international government affairs, showed symptoms of severe disorientation when he gave an interview to Reuters. Not only did the former foreign policy adviser to Sarah Palin require that Japan shutters some car plants before the country is admitted into the proposed Trans-Pacific Partnership (TPP) pact. Biegun also claims that Japan is “the most protected automotive market in the developed world.”

This is a perplexing claim. The U.S. has one of the lowest tariffs on auto imports, 2.5 percent. It is outdone by Japan, which has the world’s lowest tariff: Zero.

Says Reuters:

 “But Ford contends the Japanese government maintains a number of regulatory and other “non-tariff barriers” to keep out most foreign cars and also intervenes heavily in currency markets to help its auto companies export cars.”

William Duncan, director of the Japanese Automobile Manufacturers Association’s office in Washington, says Biegun’s arguments are “rather bizarre,” and I agree.

Biegun’s claim that Japan manipulates its currency must be based on hallucinations, or drugs that trigger same. A look at a chart shows that the Japanese Yen is close to its all-time-high against the dollar, a fact that shunts Japanese exports more effectively than any trade policy. Claims that Japan manipulates its currency usually trigger a psychiatric evaluation, but don’t seem to be out of character for a Sarah Palin advisor.

Biegun repeats the old “non-tariff-barrier” talking points, but cannot name specifics. On that, Biegun and his colleagues are sitting in the glass house.  The U.S. market is surrounded by one of the highest non-tariff barriers in the world, the Federal Motor Vehicle Safety Standards, which are largely incompatible with the rest of the world that is more or less aligned behind UNECE standards or is derivatives.

A large part of the American cars that come into Japan don’t even have to adhere to Japan’s standard type approval. They are coming in under the Preferential Handling Procedure (PHP), a certification option for low-volume imported vehicles of less than 2,000 vehicles per vehicle type.  Under this procedure, cars can be brought into Japan with minimum paperwork, not even a test vehicle is required. Successful importers to Japan, such as Volkswagen, BMW or Daimler, have to contend with much more red tape than the Detroit whiners.

The Preferential Handling Procedure was,  says the Japanese manufacturer association JAMA, established in “1986 at the request of the United States Government to ease the burden on importers.”  The U.S. did not reciprocate and provides no such loophole for small volume imports.

Most of all, half of America’s automobile market, and the most profitable half, is surrounded by a tariff barrier as formidable  as the Chinese Wall: Since the early 60s, there is a 25 percent tariff on light trucks imported to the U.S., which pretty much stopped imports of light trucks to the U.S.

One continues to wonder what makes Ford and its Detroit friends resort to lies and distortions. More than 70 percent of all Japanese cars sold in the U.S. are already made there. With the yen being obscenely high (Sarah Palin won’t know, she rarely travels), exports from Japan get smaller by the day.

The moaning about being shut out of the Japanese market is ridiculous. American cars are largely unsalable in Japan. They are doing worse in Europe. GM exported a total of 109 cars from the US to Europe in the first three months of 2012, says ACEA. In the same period, GM exported 819 cars to Japan, says the Japan Automobile Importers Association.

Observers are scratching their heads when the U.S. car industry is going into hysterics about Japan and the TPP. Japan’s high yen is a much more formidable barrier to entry than  America’s 2.5 percent duty. Two possibilities:  Detroit wants to maintain the chicken tax. A silly exercise, given that even made-in-the-U.S.A. Japanese trucks are not taking the world by storm. Or, more plausible, the U.S. wants to keep Japan at a disadvantage when it comes to the emerging markets that are part of the TPP.

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62 Comments on “Ford Demands Ultimate Sacrifice From Japan: Kill Some Car Factories, Then We Talk...”

  • avatar

    That’s a lot of Sarah Palin references.
    Can we please just stop talking about her?
    Maybe put her in a bottle with all of the Kardashians and see who lives.

    • 0 avatar

      He may be using a lot of Sarah Palin references, but this idiot was one of her minions and thinks much like her, sad, really. This is about as bad as those ditto heads who regurgitate Rush Limbaugh ad nausium.

      • 0 avatar

        Biegun’s CV suggests he’s more of a mainstream Republican, not a Palinista. Does he call for smaller and less intrusive government? Not that I could find in an admittedly quick search.

        Incidentally, I don’t agree with his stupid message. Ford shows little patience. Japan has off-lined all their nuke reactors, which provided a significant contribution to their energy requirements. Those car plants may be shuttered this summer during peak energy demand periods …. which could lead to more Japanese overseas car plants. Ford should be studying how to take advantage of their possible coming energy crunch rather than whinging and rent-seeking.

      • 0 avatar

        chuckrs: “Biegun’s CV suggests he’s more of a mainstream Republican, not a Palinista.”

        From a long-ago news item… “Steve Biegun, who once served as the No. 3 National Security Council official under Condoleezza Rice at the White House, has been hired as chief foreign-policy adviser to the Alaska governor, campaign officials told NEWSWEEK.”

    • 0 avatar

      Sarah Palin knows how to use weapons. Pretty sure she’d survive against the Kardashians.

    • 0 avatar

      Agreed, not only do they feel *old* its not as if the current administration is in touch with Japan’s currency issues, or Earth for that matter. But the geopolitical moves being made here are quite fascinating, it seems Detroit is using some political clout to secure its long term future. I’m not up on Japan’s Yen situation and would speculate much of it recently has to do with the tsunami, however I am aware the Chinese have deliberately manipulated the Yuan for years in order to undercut the competition. Assuming the Japanese have been and can do the same, Detroit can not compete in the long term with cheaper Asian imports from multiple markets. Japan is in a weak spot right now between an aging population, massive deficits, a new (perhaps permanent) reliance on fossil fuel since 1/3 of their grid was shut down today (google it), and complete reliance on the United States for national defense. Between South Korea, Japan, and China, I’d choose Japan to bully at the moment too.

      • 0 avatar

        On another note, I think the smart move here for Ford would be an alliance or merger with one or more Japanese firms, Mazda being a logical move. The US can offer raw materials on a cheaper supply chain than Japan and can offer a younger workforce as well. Build the cars in North America for Asian and/or world export. I’ve never been to Asia, but just from reading TTAC it seems Chinese do not seem to go for their domestic brands, I assume the same can be said for other countries in the region. They Japanese brand built in the US may sell as well to them as it does here in Camcord form, but maybe this is already happening and I’m ignorant.

  • avatar

    “With the yen being obscenely high (Sarah Palin won’t know, she rarely travels), exports from Japan get smaller by the day.”

    WTF? I’m surprised you didn’t mention the Chevy Volt while you were at it.

    Palin doesn’t work for Ford, Sherlock.

  • avatar

    Is it just this idiot doing the whining or is this the ACTUAL Detroit industry doing the whining and he’s the fall guy to do said whining?

    I would agree, he sounds a lot like Palin in that he seems to know not much about things. Sad, really.

  • avatar
    Educator(of teachers)Dan

    (In a feeble attempt to lighten things up…)

    Does she come with the car?

  • avatar

    I’m sure Barry doesn’t have any morons working for him at any level what-so-ever. Stand up Chuck!

  • avatar

    It doesn’t matter which side of the political fence you prefer, Sarah Palin’s or Obama’s, the fact remains that it was our own auto industry that alienated many of its former customers with poor quality vehicles and planned obsolescence, for decades. I owned several American brand cars that were made in the US of A over the years.

    You can’t blame people for wanting to get more and better value for their money when buying a car and that is exactly what the foreigners gave them. And making them in the US or closer to the point of sale increases the profits. All the US automakers do the same.

    Add to that our own economic policies of driving our industries out of the US with over-regulation and disproportionate taxation and what you get is where we’re at. Japan’s automakers did not do that to us.

    What Biegun is advocating is a wishlist, or a do-over, when it comes to the US auto industry. But superior Japanese products aren’t the only culprit. Buyers preferences also play a huge part.

    There are also the US automakers themselves who decided to make their cars in Canada and Mexico. It would have been a far, far better thing had the US auto industry kept those jobs at home.

    • 0 avatar

      Leave Mexico and Canada out of this: Mexico builds far fewer American vehicles than it buys; therefore, under any reasonable rules of fairness, Mexico has earned its right to enjoy some of the spoils of NAFTA. In 2010, (the most recent figures I can find) GM sold 156k vehicles in Mexico. Ford 89k. Chrysler 79k. That is out of a market that performed at 820k sales that year. Detroit holds 40% of the Mexican market.
      Canada had a vibrant automotive industry until the U.S. started buying it up. This makes sense considering the sheer size of the American economy and the juggernaut it became. McLaughlin Motors (now GM) went back to the 1860s as a carriage maker in Ontario. Still, Detroit managed to hold onto 47% market share in Canada, which is good for nearly 3/4 million sales in Canada last year. Do not begrudge Oshawa, Oakville and Windsor: they’ve been building vehicles for nearly a Century and do far more than just slap them together with parts shipped from Asia. It’s the production plants in Alliston, Cambridge and Woodstock, from Japan Inc that are tilting Canada’s trade imbalance with the U.S.
      There are many loyal Canadians out there who consider Detroit ‘Canadian,’ because of our entwined histories. How many Canadians crossed the border and became executives in Detroit? GM of Canada has been the largest ‘Canadian’ company for decades, employing more Canadians (even now) than either Toyota or Honda.

      • 0 avatar

        Mexico exported 194,640 of the 242,317 vehicles they built in FEBRUARY of this year. I’m not sure why you think they buy more US badged vehicles than they build. It doesn’t seem to be the case.

      • 0 avatar

        You make a great case, but I’m not in favor of US auto manufacturers making vehicles for US consumption in either Mexico or Canada. I’d like to see them build them in America like they did in the fifties, sixties and much of the seventies.

        What I am in favor of, and this may surprise some of you, is that the transplants and foreign manufacturers with plants in the US should pack up their plants and move them all south of the border, or to Canada, or both.

        I am not in favor of the UAW or organizing the foreign plants because for decades the UAW helped drive our US automakers into financial ruin. But I agree that the foreigners and transplants actually impacted Detroit Iron in a more severe way by setting up plants inside the US, paying their taxes to local governments and providing jobs for Americans who also pay taxes to municipalities, at the expense of the UAW.

        It really put the UAW and Detroit in a bad light and exposed their lack of quality, durability and reliability, when the foreigners (all of them) started making them inside America.

        Now, I am grateful for the jobs the foreigners provided Americans, but I think it would have caused a lot less controversy had they built the plants in Mexico or Canada, and imported their vehicles like they did all those years before from Japan, South Korea, Germany, etc.

        They didn’t build those plants for OUR benefit — they built them for their benefit and their bottom line. And in several cases they paid dearly for it with lapses in quality and corner-cutting by American suppliers. (Let’s not go there. It’s well documented).

        Had the foreigners built more plants in Mexico, maybe more Mexicans would have stayed home instead of coming over here. Even my Mexican-born daughter-in-law (now a naturalized US citizen) agrees with that since she is now constantly being equated to and harassed as an illegal alien when on the road or passing through a Border Patrol station (US54 & US70). She has to carry her US Passport everywhere she goes.

        So I can’t leave Mexico and Canada out of this because it is my contention that us automakers should have kept the jobs here in America instead of trying to minimize the effects of the UAW/CAW.

      • 0 avatar

        I hadn’t really thought about those particular facts, particularly the sales figures in Mexico!

    • 0 avatar

      >>It would have been a far, far better thing had the US auto industry kept those jobs at home.<<

      And they would have gone bankrupt far, far faster than they did.

      GM (and to a lesser extent Ford) needs Mexico to offset their productivity disadvantage over the Asian brands.

      • 0 avatar

        And they would have been bailed out far, far sooner as well.

        I understand WHY the US manufacturers are building plants in Mexico NOW, and I also understood why they built them in Canada. It makes good business sense for them, but not for the people who could be working those same jobs in the US.

        I just don’t agree with the concept that American car makers outsource their work to neighboring countries, the UAW notwithstanding as the major culprit for the woes of the US auto manufacturers. The CAW is no better and no worse than the UAW.
        They weren’t getting away with anything moving those jobs to Canada. Still the same old union shovel digging their graves.

  • avatar

    Having lived there for two years in the 1990s, I’d say the biggest barrier to entry for American-made cars in Japan is the width of the roads.

    • 0 avatar

      Agreed. Biegun should request that Japan widen all their roads. It isn’t fair that Ford has to design their cars for the market instead of the market matching what they already make.

      • 0 avatar

        Hot of the presses, read all about it!
        Ford demands that Europe makes it mandatory for cabbies to drive body-on-frame gas guzzlers. You know lynx, cougar, cheetah or similar platform.
        GM demands that SE Asian countries starts to encourage street level drug dealing and drive by shootings. Spokesman quoted as saying “with these restrictive values, how the hell are we suppose to sell Escalades?”
        Chrysler questions Africa’s lack of Square dance and truck balls. Spokeswoman is outraged “They [Various African governments, Ed’s note] are trying to hinder the sale of the RAM 3500 without having to use outright sanctions. Why on gods green earth are there no retailers of truck balls in Somalia, and not a single honky tonk in Liberia?”

      • 0 avatar

        Not to mention those Japanese “Guvmint” regulations making vehicles drive on the left.

        Help, help I’m being repressed!!

  • avatar

    From the model’s helmet I’m guessing her personal vehicle is a 50cc scooter. Can’t see the sleeves of her kimono so don’t know if she is single or married…..the fold at the bottom of the left sleeve suggests it’s a furisode kimono and she’s single.

    • 0 avatar

      That picture is all kinds of win. Right up their with the one of the Geisha talking on one of the early cell phones in the back of a taxi.

  • avatar

    Lost in the geopolitical and domestic political noise is the fact that one issue Biegun raised is one that many in the global auto industry refuse to face: even as more factories are built, the industry as a whole has a serious overcapacity problem. The bankruptcies of GM and Chrysler took care of a lot of that in North America, but overcapacity remains a problem in Europe and Japan (and probably China too), meanwhile more factories are going up in India.

    “This is an industry that is hugely overweight in Japan and can only survive on the back of enormous exports unless it restructures,”

    Is there anything untrue in that statement?

    As for Ford’s lobbying for conditions of allowing Japan into these multilateral talks, do Japanese, German and Chinese automakers act any differently than Ford, when it comes to trying to manipulate trade agreements? I doubt it.

  • avatar

    I think the fact that much of Japan is a radioactive wasteland now will close some of those factories. Also, the fact that Japan has shut down ALL nuclear power plants tells me they won’t have enough power to run all the car factories.

    • 0 avatar

      The ‘restricted zone’ is a 12 mile wide circle around the Fukushima power plants. 12 miles, dude. And the last I heard the government was easing restrictions on people moving back to their homes inside the zone. Hardly a ‘radioactive wasteland.’ Wishful thinking, perhaps?

  • avatar

    How about lowering those non-tariff barriers in the US — such as EPA and DOT regulations that make it way too expensive for small European car manufacturers to federalize models?

    • 0 avatar

      Until 1913, 85% of the revenues Washington survived on was generated by tariffs. For 123 years, it worked fine for the country.
      I suspect that as policy makers realized that falling shipping costs were going to make globalized trade more economical, they started to shift the tax burden from the import taxes to income taxes.
      But, really, which is better? Brazil is one country that I know of that has high tariffs and low income tax: their underground economy is so huge that they only thing they can control are their ports and borders. Consumption taxes (sales tax, for example) used to stick in my craw, until a lawyer friend pointed out that with all the illegal alien residents working ‘under the table’ and the number of businesses also doing so, in many cases a tax on sold goods is the only revenue stream these people and companies participate in.
      The point is, Canada/U.S. of 2012 bares no resemblance to our countries of 50 or 60 years ago. We’ve raised at least 1 generation of spoiled, entitled brats. The middle class is tired of getting raped at tax time. The college kids haven’t figured out that all the $80k jobs are going to Bangalore or to 2 sisters from HK who just moved here. As nations, we will never again vote or think in the same way that our parents and grandparents did. It’s ironic that as technology brings us together, the niche marketing of society (how many SUVs do you really need to choose from – and isn’t an SUV just a wagon?)
      At some point, as a society, America (and Canada) has to step up and decide: do we want to play in the big leagues, or are we going to sit idly by and do nothing as the home-grown, domestic, 107 year old auto industry dies a final death, taking with it our ability to build anything more sophisticated than a Post-it Note or Velcro.

      • 0 avatar

        Wise. I was unaware about the reliance on tariffs before we were saved by the privately owned Federal Reserve system and later by the great Franklin Roosevelt who relieved us of our pesky gold and exchanged it for inflation tinged notes. Perhaps tariffs aren’t a bad thing to look at again, after all some are pushing for a VAT type tax to regulate consumption. Import tariffs would allow domestic goods to again compete toe to toe while funding the Federal government in place of an income tax which at this point is what 4,000 pages long and doesn’t make a lick of sense.

      • 0 avatar

        “I was unaware about the reliance on tariffs before we were saved by the privately owned Federal Reserve system and later by the great Franklin Roosevelt who relieved us of our pesky gold and exchanged it for inflation tinged notes.”

        Carbiz has this insatiable desirable to live in an idealized (read: factually challenged) version of the 19th century.

        During the early years of the United States, much of federal revenue came from federal land sales. As the US began to run out of land that it could flip after purchasing it from foreign governments and stealing it from native tribes, the income tax became a necessary alternative.

        The US’ post-war prosperity would not have been possible with a gold standard. A fixed money supply is not a recipe for success in an industrial or post-industrial globalized economy. Don’t romanticize a concept that would only produce a permanent depression.

      • 0 avatar

        Pch101 – Hmmm land sales, all of this discussion about the early 20th century makes me think “to the Wikipedia!”. I’m no economist so I can’t argue the point of a gold standard vs postwar growth you very well may be right. However gold and other metal commodities must still hold quite a bit of intrinsic value otherwise the smart money would not continue to dump their dollars into it, even if its only an inflation hedge. As I understand it the fact we are not on a gold standard is the very mechanism by which the United States is still afloat because they were able to create money to replace the money lost in those toxic assets (I’ve always wondered of course is money ever really lost? it has to go somewhere right). My only problem with it is by the inflation tax we pay by the use of it, because anyone who has lived in this country for more than a few years can see how little their dollar can buy in terms of commodities than it did in say 2006. So the federal gov’t grows and grows and requires more and more money to survive hence the income tax which is set to rise at the end of the year… but what’s the inflation tax going to be by years end? More and more the producers of this country are asked for more of their wealth while their savings are purposely being devalued and for what? The super rich aren’t certainly aren’t losing their shirts.

      • 0 avatar

        “gold and other metal commodities must still hold quite a bit of intrinsic value otherwise the smart money would not continue to dump their dollars into it, even if its only an inflation hedge.”

        Gold is not an inflation hedge. If its value kept up with inflation, then it would now be worth over $2500 per oz.

        “I’ve always wondered of course is money ever really lost? it has to go somewhere right”

        No, money is not like matter. It can be created or destroyed, and it is normal to do both, depending upon the point of the economic cycle.

        Having a flexible money supply aids prosperity and helps to avoid depressions. Gold standards can’t keep up with a modern economy, which grow too quickly to be supported by a gold standard. Gold standards also encourage hoarding (which is deflationary) and discourage trade.

        The gold standard is a truly crazy idea for the modern world. It could work when the world was pre-industrial and widespread poverty was a given, but it started to fail by the late 19th to early 20 century. A bit of inflation is far better than would a bucketload of deflation.

        Modern economies are income-based, not asset-based. In the old days, prosperity came from stealing other peoples resources (colonization, slavery, pillaging gold, etc.) Today, it comes from making stuff. A flexible currency allows us to benefit from our collective ability to produce wealth. We’re far better off with the flexibility.

  • avatar

    I am sure one day, some Phd Economics grad will sift through the rubble of what was once the United States to find out why it collapsed in 50 years, rather than the 400 it took the Romans.
    I certainly don’t see any journalist bothering today. We long noses can’t be bothered to learn the culture or the language, and the locals sure ain’t tellin.’ No, some bureaucrat from a Japanese (or Chinese or Korean) government department releases some snappy graphs and once again muddies the waters about what exactly Japan Inc has done in the past and continues to do to ‘discourage’ sales of ‘foreign’ vehicles and vehicle parts on their sacred island.
    2011’s own figures show that ‘foreign’ market penetration in Japan reached a (gasp!) stellar 8%. Honda has more market share in the United States. Honda. (oh, and the kicker is that they include importation of domestic vehicles built somewhere else, which means the true ‘foreign’ penetration is somewhat lower than 8%.)
    So, in a market of 3M units, the entire VW group managed to sell 54,000 units in 9 months of 2011. (That’s annualized at 72k, give or take.) Here’s the punchline: VW group sold 110k units in MEXICO in 2010. Let me get this straight: VW sells 11% of the market in Mexico (about what VW averages around the globe) but can only muster 2.4% in Japan?
    I enjoy the mudslinging that breaks out on TTAC with the VW-is-better-than-any-other-OEM crowd, but why do those apologists not find these statistics odd? Even if we allow that GM and Ford build junk and have no clue about the Japanese market, how then do you explain VW, or Fiat? Fiat has plenty of small, decent cars.
    Furthermore, Kia and Hyundai which have taken a page out of the Japan Inc playbook and are assaulting the North American market like never before, have virtually ignored their neighbor across the bay. Hyundai sold 3 vehicles in Japan (probably bought by Toyota and Honda to dissect!) – heck, Pontiac sold 8 vehicles in Japan in 2010.
    Something stinks, of that much I am positive. GM had to buy Daewoo just to get entry in the Korean market and now has 6% – almost the entire market penetration of ALL OEMs in Japan.
    Nero may or may not have played the fiddle while Rome burned, but I am dismayed when I read this and other blogger sites where armchair critics debate their right to buy a foreign designed, and built vehicle, how it is their right to buy a refrigerator from China for $400 that will break in 3 years anyway and how great America is because it absorbs the best ideas and concepts from around the world.
    That may once have been the case. However, as I look around at the recent grads and students around me(like on Seattle TV early last week even!), I simply despair.
    Thirty years ago, Iaccoca and the UAW whipped up a fairly effective hysteria over the sudden surgence of tiny Japanese rust buckets on these shores. Japan Inc’s reaction was to build factories in the poorest parishes of the largest market in the world, then launch a 30 year PR campaign, complete with endowments, press junkets, Toyota stadiums cleverly popping up everywhere, $100M here, $100M there. You’re being bribed with your own money, that’s the beauty of it!
    Going back to 1966 when Gus Stelzer, an executive at GM, told off a wealthy GM dealer, Burt Chevrolet, who wanted to open a Toyota dealership. Stelzer warned the dealer that he could not use any of GM’s proprietary systems or any of their trained technicians. None other than the State department intervened when Toyota filed a complaint.
    In one swoop, Toyota (and Datsun and the others) got billions of dollars of GM’s expertise for FREE. For what does an OEM have that is more valuable than their prime locations? Wal-Mart was shut out of many markets because Sears already had the best location. Infact, Wal-Mart did not even come to Canada until K-Mart went bankrupt and 120+ prime locations landed in their lap.
    This has always been a battleground that the home team cannot win. Even when Jim Press blabbed about Toyota taking $2B from the Japanese government for the Synergy Drive development, he was soon enough muzzled.
    What Japan and Korea practice is nothing resembling free trade. Brazil and Japan’s markets are about the same size, but why is everyone choosing to operate in Brazil, and not Japan?
    Why did it take Toys R Us nearly 4 years to open its first location in Japan? In a shaky democracy where they have a new Prime Minister by the evening news, perhaps byzantium bureaucracy and obfuscation are a way of life for the Japanese, but I don’t believe that is an accident.
    Many people find it too easy, convenient even, to attack Detroit and blame their fall from grace on themselves.
    Gee, I dunno: for 11 years I worked for a GM dealership that occupied a prime 8 acre lot in Toronto for 53 years, before being summarily moved off to a smaller location with no left turn lane down the street, and an 80,000 sq ft Toyota facility was opened where we used to be. Oh, owned by the same company, of course. Forget that the resorts, and dealerships and office buildings that they own were paid for by their profits from selling Chevrolet-Oldsmobile for 30 years: what have you done for me lately?
    This is not business, this is war. When the rust belt is dust, the United States will be powerless to defend itself. And if you want to entrust your future to Halliburton and few remaining successful American companies that absolutely depend on the military industrial complex to survive, I think I’ll hedge my bets and throw my hat in with the Chinese.

    • 0 avatar

      I disagree with your diagnosis of Detroit. In my opinion, the main problem is Detroit remains uncompetitive. And, this is all due to the UAW. The Japanese have more money for engineering and build because they don’t have the UAW problem. So, hard working middle class americans make the correct choice for their family by purchasing foreign vehicles because they are a better value.

      Detroit took a bunch of capacity down in order to cut the supply. The hope was reduced supply would allow a price increase, then the UAW problem would be solved. This solution is just temporary.

      Now, lower cost producers are rapidly filling this gap, and it appears foreign automakers are now the low cost producer. Detroit tries to differentiate themselves with a bunch of useless technology. This will not work.

      Detroit is on it’s way to a slow death that can only be solved with the termination of the UAW.

      • 0 avatar

        Agreed, although it seems as if the UAW is already on life support after their failure to get into the transplants down south. Perhaps unlike so many other loser companies, they will be *allowed* to fail.

      • 0 avatar

        Analysis of Detroit? Ah, I was merely asking the question (still unanswered) as to why NOBODY sells vehicles in Japan or Korea.
        Dozens of books have been written about Detroit. Most are pure garbage. Yes, the unions are evil and the UAW is possible Satan’s spawn. Yes, General Motors was pretty arrogant in the early ’80s and made a lot of mistakes. Perhaps of the 30 or 40 models GM, Ford and Chrysler make there is NOTHING that fits your requirements. There are plenty of variables and plenty of blame to go around.
        But it doesn’t help when MITI painted a bulls eye on your back. Nor a PR campaign aimed squarely at the college kids who hated their mother’s Citation/Zephyr/K-car.
        I feel like I’m peeing into the wind. If Americans don’t give a damn about value-added jobs, the ‘arsenal of democracy,’ or even the U.S.’ ability to build anything, then why should I?
        I work in the condo industry, which in Toronto is entirely fueled by Asian immigrants, so my job is guaranteed. Canada has enough oil, potash, uranium and fresh water to feed the world, 5 banks who were refused repeated requests to merge and a super power on 3 of our 4 borders. Heck, life is good.

  • avatar

    More whining from the Land of of the rising excuses, Detroit.

  • avatar

    “Since the early 60s, there is a 25 percent tariff on light trucks imported to the U.S., which pretty much stopped imports of light trucks to the U.S.”

    Toyota, Datsun/ Nissan, Mazda, Isuzu, Mitsubishi and Subaru all established a truck market in the US following the creation of the chicken tax.

    The chicken tax is a non-issue. It is avoided with little difficulty. (For example, Toyota would bolt on the beds at port in the US; the Subaru BRAT used jump seats in the bed in order to classify it as a car. Today, all Ford Transits are imported with seats and windows as a means of getting around it.) There are enough loopholes in the rules for one to, er, drive a truck through the requirement.

  • avatar

    Amazing how arrogant Ford is these days. From pricing vehicles to telling countries they need to close factories…it’s absolutely astounding.

    Ford really is the new Toyota. Mediocre products and a sense that they cannot do anything wrong.

  • avatar

    I’m going to be blunt here- I’m Australian, and new American cars, with the exclusion of Austrian built Chrysler 300 models have been pretty much unsaleable for decades. RHD conversions have been pretty poor, the quality has been pretty grim, styling tastes have diverged greatly and the value for money compared to Japanese and Euro cars has just been uncompetitive. The mainstream models like the Neon and Taurus that have come here have just sat on the showroom floors. Now here is the kicker- if you guys cannot sell here, in the market whose tastes are most like the U.S, how in God’s name are you going to in a market so radically different as Japan? They don’t need tariff barrier- the cars they want are just not built in the U.S.A!

    • 0 avatar

      Good points, it seems no one did marketing surveys before they built the cars for export, it seems they just built them slapped on a right drive conversion, and shipped it down under, the ignorance is daunting.

      • 0 avatar

        I do have to add something tho- Jeep does well here, but it’s products are sized well for the market, are rugged and well marketed, Hummer sold OK, but owners are openly laughed at for driving Tonka toys. American CAN sell, just not too extreme in the execution. Think of a Mustang for less than $50,000, not a Suburban for over $100,000.

    • 0 avatar

      “I’m Australian, and new American cars, with the exclusion of Austrian built Chrysler 300 models have been pretty much unsaleable for decades.”

      Ford and GM have long maintained regional product strategies. Cars built in North America have been made for the Americas, European cars for Europe, Australian cars for Australia and NZ. The cars meant for you were made in your home market, not here.

      In that sense, Ford’s complaints lack sincerity. The Japanese market doesn’t offer much promise for Ford, especially for virtually anything designed with Americans in mind. They obviously don’t want the Japanese at the negotiating table, for whatever reason.

      That being said, Japan does have non-tariff barriers. They aren’t just a figment of the American imagination, but they have also been criticized by the EU, Australians, and India, among others. Import penetration there is low, and the prices of imported cars are necessarily high, which inherently limits demand.

      These barriers probably don’t have much meaningful impact on Detroit, which doesn’t make vehicle that appeal to Japanese tastes. But these barriers do impact the Europeans who, contrary what is suggested in this article, actually do complain about them:

      • 0 avatar

        Point taken! Thanks for the link.

      • 0 avatar

        Dodge are pulling out of Australia.

        I like the Dart but a good car with no branding and an existing bad vibe doesn’t make for a business plan.

      • 0 avatar

        That’s sort of a chicken-and-egg problem, though. If you can’t practically sell cars in Japan, there’s no sense designing for Japan. (Many of the high-volume cars in Japan are small MPVs, and having access to that market might well give foreign manufacturers the foothold to popularize those sorts of cars elsewhere.)

        Looking just at Ford, there’s no reason the Fiesta and Focus shouldn’t sell well in Japan. Heck, the Fiesta is based off the same platform as the Mazda 2/Demio, which is among the top ten selling cars in Japan. Likewise, plenty of Focus-sized cars sell well in the Japanese market. And all of Ford’s European products are natively RHD for the UK market already.

        Granted, some of the top selling cars in Japan are models without real equivalents elsewhere — Kei cars, or wacky MPVs. But there are plenty of cars in the top seller lists in Japan that are popular elsewhere — Honda Fit, Mazda Demio/2, Toyota Vitz/Yaris, Toyota Corolla, to name a few — and which have successful competitors in foreign markets. The fact that Japan is the only market where none of those cars’ competitiors does well suggests that the market is far from open.

      • 0 avatar

        Looking at Ford’s japanese site, the only vehicles they offer there are the Mustang, Escape, Kuga and Explorer. No KA/Fiesta/Focus/Mondeo/Fusion or B-Max/C-Max/S-Max/Galaxy.

      • 0 avatar

        “Looking just at Ford, there’s no reason the Fiesta and Focus shouldn’t sell well in Japan.”

        There’s plenty of reason — the domestic Japanese competition already dominates the space with a flood of product. There isn’t much reason to invest much time and money just to fight over scraps.

        Japan is not an exciting market. It’s highly competitive, with many domestic brands, while it has low growth prospects. It makes sense for a luxury brand such as BMW to make a play there, but no sense at all for the American automakers to devote a lot of time, money and energy to expanding their businesses there.

        Ford doesn’t want the Japanese at the trade talks because it doesn’t want the competition. Any excuse will do.

  • avatar
    John R

    I can’t speak for the rest of Latin America, but I’m in Panama right now and Korea & Japan OWN the “calles” down here. I would say 5 to 1. Only the more mundane Euro brands (Renault, Peugeot, Skoda, FIAT) are rarer.

  • avatar

    The headline on the TTAC article says “Ford demands”, the Reuters headline is “Ford asks”, and then there is what Biegun said, which was that the “Japanese auto industry is hugely overweight and can only survive on the back of huge exports unless it restructures.”  Which is true,  If nothing changes the strong yen will force auto plants to close in Japan–a  free trade agreement is good for the Japanese car industry in Japan.   If there is something good in the agreement for the Japanese auto industry, someone had better make sure there is something good in it for the US auto industry or the Obama administration is not doing its job.  Biegun, at least, is doing his.

  • avatar

    I’m genuinely surprised everyone’s just attacking this guy’s credentials rather than looking at the merits of his arguments.

    This report here, though published by US car companies, makes some really good points:'s%20Protected%20Auto%20Market%20copy.pdf?1327366930

    The Japanese government has long maintained an industrial policy where it protects its own car markets. It’s only because the American government has a cozy relationship with Japan we don’t go after them stringently.

  • avatar

    Nothing is going to change, nor are the mouth pieces who believe the Japanese have ethics and play by the rules. The Japanese Govt is not going to stop spending trillions devaluing the Yen, nor is it going to stop sneaky programs aimed at benefiting Japanese brands. The Japanese govt should be proud of themselves if they can convince a large part of the world that they have an open market. I bet they are laughing at us behind our backs for being incredibly stupid and falling for their BS.

    Its time Ford and other American companies take the high road and quit complaining. Its not like the Japanese market is profitable nor do they stand a chance when 98% of the sales go to local brands due to high nationalistic pride. The market is mature and the population is aging. A third of the men are sterile and the other two third have no interest in women(grass eating boys). Is it any surprise that the Toyota and Honda do well in a country that sees automobiles as mere appliances.

    If Ford had any sense they would ask Japanese companies to increase production in Japan, not cut it. The high yen is swiftly killing them. The last thing you want a company like Toyota which produces 3 million cars a year in japan, most at a loss, is have them move production elsewhere.

    From “Toyota last year built 2.76 million cars at home, accounting for one-third of Japan’s total vehicle production. It exported 57 percent of that, much of it at a loss. A plan to return its Japan-based parent operations to break-even assumes a dollar rate of 85 yen.”

    The Yen stands at 79.8 for a dollar and is rising steadily.

  • avatar

    Better approach to close factories and destroy manufacturing in Japan and hurt Japanese brands in general would be to import American MBA educated CEOs and executives to lead Japanese companies. The only problem that Japanese boards will not let it happens.

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