From the May 2017 issue
It’s a claim we’ve heard from America’s automakers time and time again: The Japanese car market is the most closed in the world. The latest press release from the American Automotive Policy Council (AAPC), a lobbying group for FCA, Ford, and GM, urges Japanese prime minister Shinzō Abe to “open up [Japan’s] market in a meaningful way to U.S. cars and trucks.” But Japan hasn’t had import tariffs on automobiles since 1978.
Japanese buyers drive home 300,000 foreign cars a year out of about 5 million total, yet fewer than 15,000 are American imports. German automakers, which are subject to the same rules as American companies, do much better: BMW sold 46,000 vehicles in Japan last year, Volkswagen moved 55,000, and Mercedes 65,000 units. The numbers for the rest of the global auto industry indicate that maybe American companies are just no good at selling there.
The AAPC sees it differently. “If the import participation rate is at 6.5 percent, there is no other explanation for that but for non-tariff measures,” says Matt Blunt, the former Missouri governor who serves as AAPC president and spokesman. The AAPC maintains that Japanese currency manipulation routinely devalues the yen, making imports less affordable. The organization also decries Japanese regulations and taxes as impediments to doing more business there.
Truly, Japan’s auto market is a Galápagos Island of odd species, tilted heavily toward the small, tall, boxy cars that fit Japan’s narrow, congested streets and better navigate laws that perennially tax owners on engine size and vehicle weight. This advantages European manufacturers, who sell 117 models in Japan with engines that displace less than two liters, compared with just 10 American models. Altogether, there are 289 European models on sale in Japan, while Americans offer only 24. However, Japan lets any automaker sell 5000 cars each year without meeting its emissions or safety rules.
Of course, there is also the elephant in the room: right-hand drive. GM’s whole Japanese business plan is left-hooker Cadillacs, Corvettes, and Camaros, along with a right-hand-drive Chevy Captiva SUV. Annual sales barely hit 1000. FCA’s American arm does much better—it sold almost 10,000 vehicles last year—but its whole non-Fiat lineup comprises Jeep and a handful of Chrysler 300s. Ford quit Japan altogether in 2016.
In fact, you could say the Big Three have given up trying. Over the past two decades, Chrysler, Ford, and GM have lost three-quarters of their dealerships there, while European-branded retail points have nearly doubled, according to the Japan Automobile Manufacturers Association. And from 2009 to 2013, Audi, BMW, Mercedes-Benz, and Volkswagen combined to spend 20 times what the American brands did on marketing in Japan. Well, with so few products to sell, there’s not much to advertise.
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