Japan Says There's Nothing Closed About Its Barrier-filled Automotive Market

Matt Posky
by Matt Posky
japan says theres nothing closed about its barrier filled automotive market

Japan has, once again, scoffed at U.S. demands for better access to its car market on Friday, setting the tone for next month’s unproductive talks on bilateral trade and economic relations between the two countries. U.S. Vice President Mike Pence and Japanese Deputy Prime Minister Taro Aso are supposed to hash things out in April but, before they’ve even managed to exchange pleasantries, the table is being set for failure.

If you’re wondering who is to blame, there are plenty of places to point the finger. The U.S. government complained to the World Trade Organization on Wednesday, claiming there are “a variety of non-tariff barriers impede access to Japan’s automotive market.”

Today, Japan’s Chief Cabinet Secretary, Yoshihide Suga, offered his rebuttal to reporters. “We do not impose import tariffs on cars, and we do not impose any non-tariff barriers,” he said.

Deciphering which country is slinging lies is a waste of time, as both are technically correct in their statements. While Japan does not impose import tariffs on American automobiles, but they’ve also routinely failed to sell any at a meaningful volume. A large part of that has to do with the overwhelming prejudice against U.S. cars within the country. What cars do make it are part of a niche market that is so small, it’s almost not worth mentioning. American cars only made up 0.3 percent of the Japanese market in 2016 and those that do make it to the islands end up stickering for nearly double the domestic price.

Any automaker wanting to sell at volume would be forced to invest heavily into Japan’s costly real estate, build an extensive dealer network, select models suitable for the market, and then spend a fortune on a massive PR campaign to change the perceptions of a consumer base that had already made up its mind. It’s a massive expenditure what would still result in a big gamble. However, that gamble would be tariff free.

“Our position is that Japan’s auto market is already open. This is something that will be settled in our bilateral dialogue,” claimed Suga.

It might not even be worth debating the matter, as we know Japan isn’t interested in offering a handout or even a leg up to foreign manufacturers — even highly desirable German cars just barely get in. However the Trump administration has indicated a strong interest in supporting U.S. automakers and has already been critical of the Japanese government for sending so much product to North America while accepting so little in return.

Lines are being drawn in the sand, and you just have to wonder why. Especially when China is right there, much larger, and open for business.

[Source: Reuters]

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  • Jeff S Jeff S on Mar 12, 2017

    Shouldn't building a more competitive and higher quality product apply to all markets and not just the Japanese? The quality of American brand vehicles has improved drastically over what it was 20 or more years ago. Could it still improve? Yes but give credit where credit is due. Look at the Mustang, the full size American trucks, and cars like the Chevy Impala which are drastically better than they were even a few years ago. The problem with Japan is that they have an aging population with not a lot of potential for large growth. Also the US does not make Kei cars and most of the compact and subcompact cars that US manufacturers make are based on European or South Korean cars with many even being made overseas and designed overseas. Most of our US base cars and trucks are too big for Japanese roads. Yes it is possible to be more competitive in Japan but is it worth the expense and could the resources be better utilized in China, India, and other Asian countries with younger populations and more potential for growth? Quality alone will not get you there but you need quality to get customer loyalty and repeat business.

  • TomLU86 TomLU86 on Mar 13, 2017

    "Tax structure". It's not realistic to expect other countries to widen the roads or cut their fuel taxes to accommodate our large, profligate trucks. On the other hand, like Harley Davidson motorcycles, there are quite a few Asians who would be happy to buy a Firebird or a Mustang or a Cadillac or Lincoln. So when our ostensible "allies" tax laws are clever enough to punitively tax vehicles over 2 liters displacement, that effectively shuts out US-based carmakers. Or when there is a tax on cars that over over 70 inches wide. If they want to do that, fine. Then the US govt should find clever ways of keeping out THEIR products. How about a safety tax on vehicles weighing less than 3,500 lbs?

  • Keith Maybe my market's different. but 4.5k whack. Plus mods like his are just donations for the next owner. I'd consider driving it as a fun but practical yet disposable work/airport car if it was priced right. Some VAG's (yep, even Audis) are capable, long lasting reliable cars despite what the haters preach. I can't lie I've done the same as this guy: I had a decently clean 4 Runner V8 with about the same miles- I put it up for sale around the same price as the lower mile examples. I heard crickets chirp until I dropped the price. Folks just don't want NYC cab miles.
  • Max So GM will be making TESLAS in the future. YEA They really shouldn’t be taking cues from Elon musk. Tesla is just about to be over.
  • Malcolm It's not that commenters attack Tesla, musk has brought it on the company. The delivery of the first semi was half loaded in 70 degree weather hauling potato chips for frito lay. No company underutilizes their loads like this. Musk shouted at the world "look at us". Freightliners e-cascads has been delivering loads for 6-8 months before Tesla delivered one semi. What commenters are asking "What's the actual usable range when in say Leadville when its blowing snow and -20F outside with a full trailer?
  • Funky D I despise Google for a whole host of reasons. So why on earth would I willing spend a large amount of $ on a car that will force Google spyware on me.The only connectivity to the world I will put up with is through my phone, which at least gives me the option of turning it off or disconnecting it from the car should I choose to.No CarPlay, no sale.
  • William I think it's important to understand the factors that made GM as big as it once was and would like to be today. Let's roll back to 1965, or even before that. GM was the biggest of the Big Three. It's main competition was Ford and Chrysler, as well as it's own 5 brands competing with themselves. The import competition was all but non existent. Volkswagen was the most popular imported cars at the time. So GM had its successful 5 brands, and very little competition compared to today's market. GM was big, huge in fact. It was diversified into many other lines of business, from trains to information data processing (EDS). Again GM was huge. But being huge didn't make it better. There are many examples of GM not building the best cars they could, it's no surprise that they were building cars to maximize their profits, not to be the best built cars on the road, the closest brand to achieve that status was Cadillac. Anyone who owned a Cadillac knew it could have been a much higher level of quality than it was. It had a higher level of engineering and design features compared to it's competition. But as my Godfather used to say "how good is good?" Being as good as your competitors, isn't being as good as you could be. So, today GM does not hold 50% of the automotive market as it once did, and because of a multitude of reasons it never will again. No matter how much it improves it's quality, market value and dealer network, based on competition alone it can't have a 50% market share again. It has only 3 of its original 5 brands, and there are too many strong competitors taking pieces of the market share. So that says it's playing in a different game, therfore there's a whole new normal to use as a baseline than before. GM has to continue downsizing to fit into today's market. It can still be big, but in a different game and scale. The new normal will never be the same scale it once was as compared to the now "worlds" automotive industry. Just like how the US railroad industry had to reinvent its self to meet the changing transportation industry, and IBM has had to reinvent its self to play in the ever changing Information Technology industry it finds it's self in. IBM was once the industry leader, now it has to scale it's self down to remain in the industry it created. GM is in the same place that the railroads, IBM and other big companies like AT&T and Standard Oil have found themselves in. It seems like being the industry leader is always followed by having to reinvent it's self to just remain viable. It's part of the business cycle. GM, it's time you accept your fate, not dead, but not huge either.