The Problem Isn't Tariffs, Japan Just Hates American Automobiles
Japanese cars gradually overcame the stigma of being low-quality, unreliable trash piles after entering the U.S. market decades ago. Imports became commonplace during the 1970s and Japan’s cars began setting the new benchmark for automotive quality while Ronald Reagan was in office.
The inverse can be said of American cars being sold in Japan, and it’s a well-documented and long-running annoyance for the American automotive industry. In January, a frustrated President Donald Trump complained that Japan does “things to us that make it impossible to sell cars in Japan, and yet, they sell cars [in the United States] and they come in by the hundreds of thousands on the biggest ships I’ve ever seen.”
Though the statement could be taken as contentious, as Japan does not impose any tariffs on U.S. cars, the country also exported 1.6 million vehicles to the States while America sold fewer than 19,000 back in 2015. Something is definitely amiss, and while it might not be as simple a reason as Japan hating our cars, that’s still a large part of it.
“Of course American cars don’t sell in Japan,” says semi-retired music producer and American automobile enthusiast Yoshihiro Masui.
“American cars have a bad image — they aren’t fuel-efficient, they break down,” he explained to The New York Times. “That’s not really true anymore, but dealers don’t make an effort to convince people. I’ve never seen a TV commercial. You go to a car show, they’re not there.”
Having little to no presence on Japanese roads doesn’t help that image problem, either. Last year, American cars only made up 0.3 percent of the Japanese market. The vehicles that are sold tend to be large, image-enhancing SUVs (Cadillac Escalade, Lincoln Navigator) or brawny American muscle cars. It’s a similar story for German imports, though Mercedes-Benz and BMW are viewed as unique luxury items and typically sell at a substantially higher volume. Many Japanese customers actually prefer left-hand drive cars to further push the idea of owning something unique, especially when they are buying German.
Price is another issue. American imports may not be subject to tariffs but a weaker yen isn’t helping a Dodge Charger that shows up in Tokyo at nearly double its domestic price — an issue former Chrysler Corp. chairman Lee Iacocca was critical of decades ago.
“I wouldn’t mind driving American cars if they didn’t need maintenance for a year,” said former diplomat Kunihiko Miyake to Bloomberg. “Cost-performance-wise, American cars are not good. That’s why I don’t buy them, not because of the nontariff barriers.”
Even with today’s smaller, more reliable, and budget-conscious models, U.S. automakers would still have to spend a fortune on improving public perception and ten times that establishing dealer networks in the Land of the Rising Sun. Even that wouldn’t assure success, though. It has been suggested that the country may not want too many foreign cars there, precisely because they are foreign.
Meanwhile, not quite two thousand miles away from Japan, Chinese consumers are becoming increasingly more interested in American brands. With a billion extra people and a willingness to buy from foreign automakers, China seems like a much more lucrative place to focus North America’s export efforts than the Pacific Islands.
Japanese Prime Minister Shinzo Abe will be meeting with President Trump on Friday to discuss the U.S. withdrawal from the Trans-Pacific Partnership and make a case for Nippon as an automotive trading partner.
Jeff S on Feb 10, 2017
@VoGo--The fact that Honda does export from the US to Japan does not disprove my point. The population in Japan is declining and there are fewer of the younger generation to take the place of retiring workers plus Honda is a Japanese Corporation which also manufacturers in Japan. Toyota does the same thing as well. The US in the past has had a more open immigration system but presently that is up for debate. There have been numerous articles on the aging population and the very limited immigration policy in Japan. There are Koreans and other Asians that have lived and worked in Japan for decades who cannot get citizenship even if they want to. A shortage of workers with unionized plants in Japan make it less expense for the Japanese to produce in the US, Canada, and Mexico in their non-unionized plants. Additionally it is much easier for a Japanese based company to import products from one of their foreign plants. The Japanese might not have the tariffs but they have lots of regulations that make it very costly and almost impossible for a foreign entity to export to Japan let alone do business there. I am not being anti-Japanese I am just stating the facts. Also Japan has mandatory inspections. "One of the first things an American motorist might notice about Japan is that the automobiles here all seem so shiny and new, without smashed headlights, dents, rust or even dirt. The reason is only partly that Japanese fastidiousness extends to the maintenance of cars. Rather, experts say, there really are relatively few old cars in Japan, because of an automobile inspection system that is so onerous and expensive that many people prefer to trade in a perfectly good three- or five-year-old car rather than spend hundreds or even thousands of dollars for the inspection. The inspection system, critics say, is a case study of the regulations in Japan that benefit businesses at the expense of hard-pressed consumers. It is the type of regulation that Japan's new Government is promising to relax as part of a major effort to improve living conditions. Consumer Group Complains "The people who profit from this are maintenance shops and car makers," said Fumio Matsuda, head of the Japan Automobile Consumers Union. Japan's 83,000 garages obtain 44 percent of their roughly $60 billion in annual revenues as a result of mandatory inspections. Automobile companies benefit because people replace their cars frequently. Inspections are required when a car turns 3 years old, then every 2 years until the car turns 11, then every year. The inspections, which cover more than 100 items from brake function to headlight orientation, are done by a Government test center or by an authorized service station. Other nations and many states in the United States also require inspections, either of emissions alone or also of the car's functioning, but Japan also requires car owners to have certain items checked or serviced every 6 months, 12 months or 24 months. " http://www.nytimes.com/1993/09/12/world/why-the-cars-in-japan-look-just-like-new.html Japan basically guarantees their Japanese based automobile manufacturers a market with these mandatory inspections. The US does not and most of the European nations do not have a policy this stringent. At least in Germany consumers were offered a Cash for Clunkers for several years to get older vehicles off the road and to stimulate car sales. VoGo you need to look at the entire picture as to why it is not feasible for most US businesses to do business in Japan. Japan is not a growing country and has a more limited market with not a lot of future potential. China even with is regulations has a growing population and a growing middle class. There are over 300 million Chinese that are either middle class or above which is equal or more than the entire population of the US. Given these facts where do you think is the best market to put resources in? This is not real hard to figure out.
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