Volkswagen's Tiny Up! Busts That Allegedly Closed Japanese Market Wide Open

by Bertel Schmitt

October 24th, 2012 10:59 AM

volkswagen s tiny up busts that allegedly closed japanese market wide open

Volkswagen’s ultracompact Up! is taking Japan by storm. Three weeks after its Oct. 1 release, orders for the up! have exceeded 3,000 units, The Nikkei[sub] writes.

The Nikkei thinks the diminutive 1-liter vehicle “may beat the Golf subcompact to become the German automaker’s most successful new-car launch in Japan.” The 2 door version costs 1,490,000 yen in Japan, about the price of a decently appointed kei car. Converted to dollars, it’s $18,600, but that’s with tax and converted from obscenely high yen to obscenely low greenbacks. Trust me, in Japan, it’s a bargain.

Can’t help but noticing: 3,000 Up! in three weeks, that’s what all of Ford sold in Japan January through September , and that’s more than double of what GM exported to Japan in the first nine months. If we believe the American Automotive Policy Council, then the Japanese car market is closed tight. But according to Volkswagen, it seems to be wide open to those who make what Japanese want.

#BertelSchmitt #Japan #Up! #Volkswagen

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BrianL on Oct 24, 2012

It isn't just Detroit who has problems with Japan's rules. http://wardsauto.com/europe/european-auto-makers-leery-eu-japan-trade-pact 3,000 in 3 weeks isn't bad. Probably the best selling import from a foreign brand. From your own link, the imports of VW from through September were 42k. For the year, that would be about 56k. The new up might sell about 12-15k this year. So, maybe 70k vehicles this year. I believe the expected car market for Japan is 5.1M vehicles. This puts VW at about .14% market share. This isn't a closed market, right?

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- Th009 on Oct 24, 2012
  
  I think that's 1.4%, not 0.14%. And 2% of of the non-Kei market. It's not closed, because anyone can sell cars in the Japanese market. You just need to offer a car that the consumers want to buy. Why is that so difficult to understand?
  
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- BrianL on Oct 24, 2012
  
  @th009 You are correct, it is 1.4% of the market. But, it isn't just about what consumers want. Go read the article I posted there. Read the whole thing. It isn't tariff restricted. We all know that. But to say there are no other obstacles is ridiculous.
  
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- Th009 on Oct 24, 2012
  
  @th009 The US certification rules are far more difficult than the Japanese ones. On top of that, there are tariff barriers on imports, which Japan doesn't have. So is the US market closed, too, then?
  
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- Danup on Oct 24, 2012
  
  It truly shocks me that a country would be so bold as to create a privileged class of automobile, purchased almost nowhere else in the world, that allowed its local manufacturers a built-in advantage over foreign competitors but remains defended in-country as both culturally important and uniquely suited for the market. Now if you'll excuse me, I have some Truck Nutz to pick up.
  
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- BrianL on Oct 24, 2012
  
  @th009 Nice straw man argument. Back to the point I was making about reading the article. "Garel Rhys, a professor and president of the Centre for Automotive Industry Research at Cardiff University Business School, in Wales, agrees the main headache for European exporters is not so much tariffs on imported vehicles as Japanese rules that seek to restrict imports under cover of safety or health regulation." “There are also biases in the market in Japan so that someone who buys a foreign truck, say, might be treated differently than someone who buys a Japanese vehicle,” Rhys says. “He may not get the big orders, (or) he may be looked at in a strange way by registration authorities and targeted by police, for instance.” The US certification rules are not difficult to achieve. Look how many people do it. The small amount of tariff (relative to EU tariffs) don't seem to prevent the import of cars either. So, no, it isn't closed. But, I wasn't arguing that this is why the Japanese market is closed. Tariffs are not the only way to slow or halt imports. But, at TTAC, it seems to be the only one that matters.
  
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- Niky on Oct 25, 2012
  
  @th009 Aside from stigma... which simply is a non-factor, as the whole reason big foreign cars sell is to set their owners apart from the pack... the rest is a non-argument. Having arbitrary requirements and standards specifically for your own market is not a barrier. Especially when that allows ANY manufacturer to skip most taxes by building cars to an arbitrary size, engine displacement and power output. A formula that's popular not just because of the tax breaks but because it makes these cars ridiculously cheap and easy to live with. If American manufacturers want to build Kei cars to sell in Japan, they can quite easily do so. That they don't is not Japan's problem, just as the fact that foreign manufacturers don't want to build V8-powered (non-luxury) SUVs is not America's problem. Perhaps we should talk about customer loyalty being a trade barrier? Shame on those Japanese consumers for not wanting to buy non-Japanese cars!
  
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- Pch101 on Oct 25, 2012
  
  @th009 "It’s not closed, because anyone can sell cars in the Japanese market. You just need to offer a car that the consumers want to buy. Why is that so difficult to understand?" Because that isn't really accurate. You confuse the lack of tariffs with the lack of barriers. There are non-tariff barriers that aren't easy to hurdle. Despite what you read on TTAC, the US system is easier for producers to deal with. The US negotiates with the automakers in creating legislation, then uses voluntary compliance in order to impose them, i.e. the automakers are expected to follow the rules and no action will be taken unless the government determines after the fact that they didn't follow the rules. Japan (and the EU) use a type certification system. No design is approved for sale in the market without prior government approval, which includes an inspection of the completed car. The European and US automakers all complain that the Japanese approach to type certification is not transparent. The process is theoretically used to make sure that cars comply with the law, but in practice, it is used to restrict the variety of vehicles that can be offered and to slow down the pace at which they are brought to market. Unlike the US, they can't lobby for changes and approvals that they want, which stifles their ability to innovate. Unlike the US, they have to build the car and have it inspected and approved before they know whether they will be able to sell it. Again, TTAC isn't going to tell you this, but the European automakers are decidedly not happy with their access to the Japanese market. The ACEA (European Automobile Manufacturers Association) opposes a free trade agreement between the EU and Japan. http://www.acea.be/news/news_detail/speaking_points_on_the_launch_of_free_trade_talks_between_the_eu_and_japan
  
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BigMeats on Oct 24, 2012

@onyxtape Thanks, that's fascinating. I thought it was some kind of style convention. And the case of your friend, that's kind of chilling in its relentlessly xenophobic way. Unfortunately I've known several Japanese/American academic couples whose children were given similar treatment in Japanese schools.

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Volt 230 on Oct 24, 2012

I guess the Japanese auto buyers are not familiar with VW's inherent quality issues, a far cry from their own brand's reputation for reliability.

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MrWhopee on Oct 24, 2012

Proof that when a carmaker makes a car suitable for the Japanese, they would buy it. Americans don't buy Toyotas either when Toyota sold the Japanese-market Corona and Crown as is. In fact Camrys did not get their first big break until the 'big' Camry comes out in 1992. Detroit will never sell cars in big number in Japan if they just bring their domestic market cars to Japan. Make a Kei car for Japan and see what happens!

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