Detroit demands broad access to Japan's auto market but targets narrow niche

Nobody in Japan really wants these gas guzzlers cars and the auto makers in the US just do not seem to get it.

"Nobody in Japan really wants these gas guzzlers cars"

A GM executive once told me that nearly every Japanese customer who walks into the GM dealerships want cars with plenty of power, 4 or 5 liter engines. They aren't interested in fueling-saving GM cars, like the highly successful 1.6 liter engine Cruze, which is selling like crazy elsewhere in the world.

Japan’s automakers dominate their home market with more than a 90% share, and have also captured more than a third of the U.S. market. American car makers say the playing field is tilted against them.

So seems to me the detail is here, this statement alone tells the story.

Japanese brands are taking 33% of the US domestic market too, wonder why even a third of American car buyers don't buy American and prefer Japanese makes? Note the European brands also have a slice of the US market.

Seems the US manufactures are content to sit and whine instead of addressing the real issues to do with their ailing car industry.

US car manufacturers are a bunch of whinney little b!@tches who refuse to see the situation for what it really is.

This is typical of the one sided Japanese response and excuses, due to decades of protectionsm and brainwashing. They think that U.S. cars are still built like they were in the 70s as thats the image that bozozuku or other thugs portray, driving around some dropped lincoln or impala. U.S. made cars have drastically changed, for example Ford models. The problem is that these U.S. companies have no access (due to the brainwashing and petty excuses) to the distribution network in Japan, whereas the Japanese have full access, and often dominate many sectors in the U.S. GM or Ford could do a joint venture, like they do in Korea or China here in Japan. Good luck on that happening.

@Mike45:

"The problem is that these U.S. companies have no access (.......) to the distribution network in Japan, whereas the Japanese have full access,"

What exactly do you mean by that? Other foreign makers are sold alongside Japanese makes in some dealers.

I attended the recent Tokyo Motor Show which was great! Although foreign brands like BMW and Mercedes were there, I was surprised that American makes like the new Chevy Camaro, Corvette and Cadillacs were absent.

“Made in America”, he says, in Japan means loud, gas-guzzlers whose big engines attract a high ownership tax rate."

This kind of thinking is prevailent in Japan and it so wrong, I don't know where to begin. There are plenty of small fuel sipping American cars with small engines. Ford Focus, Chevy Cruise, to name a few. It's not the barriers that are the problems for American cars, it's the closed and shut narrow-mindedness prejudice of the Japanese consumers which are the problem. And you can't do anything to change their stubborn fixed minds, it's just best to pack it in and get out of the market, and focus selling elsewhere.

They're dreaming. There's a niche for them here for medium-high end muscle cars, but that's about it.

"What exactly do you mean by that?"

The dealerships in Japan are controlled by the manufacturers, who dictate what can be sold there. In the US, the dealers are usually independent. If the US had the same system back in the 70s, Japanese cars would never have caught on so quickly there.

My brother-in-law makes good money dealing European cars in the Japanese market. I think the problem lies with the US product...

Chrysler, which sells Jeep- and Chrysler-badged cars

Chrysler is no longer an American company, really. They're a part of Fiat, who incidentally has many dealers selling quite a few Fiats, Abarths, and Alfa Romeos.

Funny how the same parent company can manage to sell small, stylish European cars. Makers that no longer sell in the US like Peugot and Citroen manage to sell cars without whining in Japan, too.

Not that I think all American cars are undesirable, but the ones that are highly desirable aren't made for the Japanese market - all LHD. Who wants an LHD car in a RHD country?

It is very simple, Japan is not a closed market for importing vehicles and has not been for a long time. As somebody has already written it boils down to the good American cars that are made are not really popular here.

As mentioned, there is a niche market here for typical American cars, some customers like them for whatever reason. Also, it is not necessarily an engine size / fuel consumption / LHD issue, look at the number of LHD 5 litre MB and BMWs driving around. The issue is with the product itself. As the article alludes, Jeep alone does quite well as NOW it compares very well with Range Rover and Land Cruiser. As with many foreign cars parts prices are very high compared to Japanese parts prices; I have a Jeep Cherokee and recently needed a heater control valve, a simple device mainly plastic. US dealer price $27, best price from a US parts supplier $22, dealer price in Japan 7,800 Yen!

What exactly do you mean by that? Other foreign makers are sold alongside Japanese makes in some dealers.

The "distribution networks" are owned/controlled by the domestic manufacturers, who charge themeselves very little, while charging foreign distributors more. Other makers have to pay heavier distribution fees, which add to the prices of imported cars. Many (most) goods, foreign and domestic, sold in Japan are distributed by middlemen who get together with each other to fix the cost of the goods they sell, while making it nearly impossible to distribute goods outside their networks.

Next, the engine-sized tax was specifically designed to prevent foreign manufacturers (mainly American and European luxury brands) from competing in the Japanese market.

Who wants an LHD car in a RHD country?

Most midsize, and nearly all compact American cars are available in RHD.

Japanese brands are taking 33% of the US domestic market too, wonder why even a third of American car buyers don't buy American and prefer Japanese makes? Note the European brands also have a slice of the US market.

The reason for many years was because of the exchange rate, in which the weak yen made Japanese cars less expensive than domestic cars. Back during the rise of the Japanese automakers, the exchange rate was above 200 yen to the dollar. Japan was a currency manipulator, keeping the value of the yen as low as possible, which allowed them to flood foreign markets with cheap cars and tv's, while making the cost of imported goods to Japan prohibitively high. But notice bak in 2010 when the exchange rate was 76 yen to the dollar, and the cost of foreign goods cheap, there was still bo reduction in the cost of imported cars. The prices were fixed by the distribution network, a practice which is punishable by prison time in every other developed country, but which is tolerated in Japan.

"wonder why even a third of American car buyers don't buy American and prefer Japanese makes?"

Because American consumers aren't rabid nationalists, like the Japanese. The Japanese don't like Hyundais, either, only because they're Korean.

Foreign cars make up less than 5% of Japanese car market - no amount of perfect car would change it that much. Germany makes nearly perfect cars, and they still don't make much of a dent. Most Japanese just won't buy it regardless, as long as there's a local Japanese version that's at least good enough. This applies to more than cars. Meanwhile, other countries' car markets are recovering; the U.S. carmakers actually gained marketshare in the U.S. last year; the new version of the top-selling vehicle in most U.S. states the Ford F-150 would become the first pickup to go beyond 25 mpg - so there's improvements overall.

People are not aware of the recent changes in the car industry;

There is very little difference in the quality of cars in the world today - you get what you pay for whether it is Japanese, European or American. Having said that Japanese cars do tend to rate ever-so-slightly more reliable - but most would never notice. The reason American cars (and to some degree European brands) do not sell as well as Japanese cars here is that foreign brands get fairly significant tariffs placed on them making them competitively expensive to their Japanese counterparts. American car makers are not just churning out huge gas-guzzlers they also make smaller cars and eco-cars.

American car makers have a real argument here. Japan doesn't play fair.

The real problem is that we drive in the opposite direction! like in UK

@Mike45

GM or Ford could do a joint venture, like they do in Korea or China here in Japan. Good luck on that happening.

The Ford Festiva announced a couple of days ago will be produced at the joint Ford/Mazda Auto Alliance plant in Thailand.

Up until 2008 (when the entire industry crashed), Ford and GM had quite a few joint ventures with Japanese manufacturers all across Asia. Mazda/Ford is probably the longest running, but GM/Suzuki also comes to mind - products from that joint venture are still fairly easy to spot on the roads here.

Why I should by a Ford F150 if it may still have Engine problems. I would prefer to buy Toyota. My first Toyota had no problems even after 4 years...

@hkitagawa....

Well, the F150 has had some issues with the ecoboost system but hey....Toyota has had it's fair share of headaches with rusty frames of Tacoma. Maybe they could put the Toyota engine in the Ford frame...

But hey.....I drive an 80 series LandCruiser which NOBODY can match in build quality these days...especially Toyota.....sad.

Because American consumers aren't rabid nationalists, like the Japanese.

Jeff, sorry but you are wrong there. Japan is far LESS nationalistic than the US. Can you imagine a debate in the US about whether the US should even have an army? Because that's where the debate is here.

Japanese people buy plenty of Korean products. Korean music and dramas are popular. Korean electronics are popular - Docomo pushes Samsung phones at the expense of Japanese phones.

No, these sorts of claims that Japan is xenophobic and closed are just a tired smokescreen hoisted by a US auto industry that isn't that dominant even in its own home market due to a reputation for poor quality and a lack of style, something the Japanese manufacturers and (most of) the European manufacturers do not suffer from. That's it.

Make products that people want and they will buy them. It's pretty simple.

Japanese market is reared to Japanese makers. I work in the Japanese automobile industry and you should know that is only the tip of the iceberg. Where I work we only make parts for other automobile parts, and the end customers, the car makers are 90% Japanese makers and only a small percent is foreign makers, the thing is we are compelled, expected and pressed to buy ONLY cars from our MAIN customer. And anyone who has lived in Japan long enough knows how Japanese people align when their jobs, or their superiors request something, it doesn't matter if it legal or rightful or fair, they just do it. Japanese align with Japanese companies and products, and everybody knows it.

The problem with those who think the issue is the size or make of American cars is that they fail to see the nationalistic mania of the Japanese, their mania and furor to be the world's number one (compared to other countries), even those Japanese who seemingly love the world or foreign countries, somehow can get rid of the disgusting mantra of "whatever is Japanese can or is the best in the world". Some will point to examples of acquaintances who don't fit that description, and of course I wouldn't dare presume ALL Japanese exhibit that thought process. However, we can without fear of being wrong that most do to some degree, especially considering how most Japanese evade direct confrontation, and if you'd press them about it, they would not say it to your face. It is in the subtle things were it comes out. Anyway, I am not going to try and number the many ways Japanese cultivate the nationalistic pride and aim at and be petulant about being number 1 in the world.

And for that matter, Americans who complain about American auto-makers and who chide them for whining about Japanese protectionism of their automakers market, how ashamed should you be.

You ALLOWED your home automakers to fall to THEIR knees, which are YOUR knees, look how your nation went after you turned your back on them. You may come with the shit of "Japanese automakers came and gave Americans what they wanted". Let's hold that thought for a moment, and go back to what I was telling you is the RULE for automakers and THEIR ENTIRE supply chains, employees BUY from their company’s MAIN client. If you are anywhere in the supply chain of TOYOTA, you buy a TOYOTA, that simple(in my company 99.9% drive the prescribed brand, only 0.1% dare not to, but they have all kinds of consequences). This is common if secret practice along all the Japanese auto industry, and it extends to those companies used, linked or homed by the automakers of those geographic areas. The office leaning company that is used to clean the office building of certain automaker is going to buy cars from that maker, as is any other provided greatly benefited from their contract with the automaker, local banks who may provide payroll services will do so as well, as you know this is the Japanese culture of reciprocity. Now pair that with the Japanese nationalism, and imagine them going by the masses to buy foreign cars to the detriment of their HOME ones, to THEIR prideful industry, to THEIR prideful economy. If you have lived long enough in Japan, you know well how everyone around you chides you for going against the norm of the expected. It matter zilch whether foreign makers make cars Japanese want, the fact of the matter is that for their daily lives they will use what they are expected to use for it is what they help create.

That is why only luxury or extravagant cars make some kind of dent in this market, those who can afford the luxury of an extra car not intended for daily commute, or can afford to be outside the norm of the expected, will buy a foreign car, and of course this people are most of the times affluent to a certain degree so luxury foreign brands fare better.

But, the Japanese that would not yield their ground to a foreign brand, went to YOUR ground and did it to YOU. Because you don't care that you brought YOUR own prideful industry, your own national auto pride to its knees, by buying their product.

I can't help to think of the phrase> "How the mighty have fallen", but I also feel "how has American become just shambles of its former self" and how shameful you did it to yourselves. You jumped for cheap, fuel friendly, ugly, tiny cars that do not merit the American spirit. You had Oldsmobiles, Pontiacs, Saturns, Mercurys, Plymouths, all these gorgeously designed cars, emblems of an American lifestyle, and you traded that for damn ugly, abhorrent hordes of Pius, Corollas, Yaris, and such design disgraces. True may be the gas prices were a factor, but thinking of the Japanese, how they would have thought first in supporting their industry, and making it stay afloat, instead of bailing to the foreign brand. Americans should be ASHAMED. You bailed to them and cost YOU YOUR jobs and YOUR PRIDE. And held the industry and country to its knees in shame in front of you and against the Japanese who would die before putting their companies through the same in their own country.

Perhaps American automakers lacked vision, yes, but instead of helping them, helping you keep YOUR jobs and pride, you deserted them. I can imagine what Japanese might have done in the same situation, like when comparing labor negotiations in both countries, in the US there are strikes, in Japan, no such thing, show high quality work and work harder in order to get what you want. Perhaps that is what the Japanese would do, buy the cars that are not really needed anymore, so as to help the makers regain their footing, pressed them to make more fuel economic cars and keep buying as to help the manufacture transition to fuel economy technologies, However, no, you trade your Americanism, your nationalistic pride for whining and capricious decision making.

So, yes, "Japanese automakers came and gave Americans what THEY(the automakers) wanted": cheap, hideous excuses for cars to replace their muscle prideful American-lifestyle ones, a stiff one in the rear of their national pride, and took the big candy out of your hands in exchange for a petty one.

Hope you've learned your lesson.

@hokaidoguy,

Thanks for that update, and that is good news. Funny thing is I have never seen any joint US venture where the product does not become wholly owned or managed by a Japanese entitiy. For example, I think Mitsubishi/Cat is now 100% owned by Mitsubishi in Japan? Others- Mitsui/Dupont, etc, ever been to their offices? No foriegn management there. We see rare exceptions like MCD or Nissan, but those are the exception.

"Japanese people buy plenty of Korean products....Docomo pushes Samsung phones at the expense of Japanese phones."

Why doesn't Samsung push Samsung products? Why does it have to be a Japanese company controlling the marketing? BTW, Docomo refused to handle the iPhone when it first came out.

Why doesn't Samsung push Samsung products?

Samsung DOES push Samsung products.

Why does it have to be a Japanese company controlling the marketing?

Who said it does? Docomo is the carrier, so they push certain phones, right? Recently they've been pushing Samsung phones, and Sony phones, and now the iPhone. All carriers push their phones. AU and Softbank do the same. It's different from the marketing the manufacturers do.

BTW, Docomo refused to handle the iPhone when it first came out.

So? That was a good call. The original iPhone was slow, expensive junk. It's now good hardware with a bad OS. Softbank took a beating on the iPhone for years in an attempt to build market share. Docomo should have stuck with its core of Android and feature phones.

@Chikatilo

Doubt.

Biggest hole in your blurp is that Aichi-ken home of Toyota the sales of imported cars is as high as Tokyo per capita.

The total of imported cars for 2013

http://www.jaia-jp.org/wp-content/uploads/201312NewCarNews.pdf

Population by prefecture

http://ja.wikipedia.org/wiki/%E9%83%BD%E9%81%93%E5%BA%9C%E7%9C%8C%E3%81%AE%E4%BA%BA%E5%8F%A3%E4%B8%80%E8%A6%A7

@SamuraiBlue

Those statistics and more arrive in our emails every month directly from our customers and our sales department.

You fail to grasp it is not about wheher imported cars have "sales" or not (even if in total they only amount to around the 5% of the market). That 5% of sales is there because people that can afford they "pleasure" cars or those who can affor to be outside the norm. Aichi Toyota factory parking lots include several foreign cars for that matter, that still matter nothing, it is still 5% of a whole market. You would still be wrong to think the guy who drives a BMW to his Toyota factory job does not have one or several Toyotas in his household, and Japanese engineers also often benchmark by owing and driving the competition (this is from experience).

The point of the discussion is whether there is a REAL chance for foreign, and in this case American, automakers to ever achieve even half of the market share Japanese makaers have in, in this case, the American market. Which in the current sate of things, not quite particularly for the make of the market, but because Japanese regulate themselves from within their nucleous of job and community, that it is not even fathomable to ever see a foreign automaker take a Toyota-in-the-American-market-like share in the Japanese market.

The reason American cars (and to some degree European brands) do not sell as well as Japanese cars here is that foreign brands get fairly significant tariffs placed on them making them competitively expensive to their Japanese counterparts.

igloobuyer please inform the rest of us what these significant tariffs are you talk of here ...

The amercians placed tariffs on the Japanese makers initially.

More than a couple of posters in this thread have no idea what they talk about, and probably its not only in this thread they do it.

Here in the UK American cars are also seen as brash. Some vehicles like the Chrysler PT Cruiser are, while not exactly common, are quirky enough for people to want one. In fact, you see very very few US made cars in the UK. We have Fords, but they are European versions, while Vauxhall is the only GM brand sold here (and as Opel in Europe).

American cars don't sit well with non-Americans unless you want to make a statement... and according to "Top Gear" American cars are made for long straight roads and can't go round corners.

@Chikatilo,

You make some excellent points, some of the best I have read on here so far. Many in the U.S. have sold out, in so many sectors, to foriegners to include the predatory business practices of the Japanese. It is an open market economy, but I have seen so many U.S. governers etc in Japan courting Japan companies to their state. Do you see an Japanese politicians courting US companies to their prefecture?

Mike45 the Japanese govt has openly and often stated it wants US and other foreign companies to set up here, and Abe is introducing policies to encourage that exact thing, so your commentary is incorrect.

Thanks for that update, and that is good news. Funny thing is I have never seen any joint US venture where the product does not become wholly owned or managed by a Japanese entitiy. For example, I think Mitsubishi/Cat is now 100% owned by Mitsubishi in Japan? Others- Mitsui/Dupont, etc, ever been to their offices? No foriegn management there. We see rare exceptions like MCD or Nissan, but those are the exception.

Mitsubishi absolutely does not own Cat. They probably own shares, but Caterpillar's operations are controlled by Caterpillar Japan. Same goes for Mitsui and Dupont - those companies have a 50-50 split on the ownership of the joint business, but Dupont is certainly not owned by Mitsui.

Not sure what foreign management has to do with anything. In manufacturing, a joint venture is about maximizing profits by avoiding transport costs, sharing distribution channels and logistics. It's not about building a happy multicultural corporation. If locals are educated enough to do the job, odds are it's cheaper than importing staff. That's the same wherever you go.

Nationalistic mania of the Japanese the cause of not buying Detroit products? Give me a break. It's a simple matter of Detroit - meaning the American car, of course - has so far failed to deliver a product that satisfies the Japanese consumer. Something that some European car makers have succeeded in, as has been pointed out by other posters here. But even those makers have a relatively small segment of the market simply because, however good their product is, they can't compete with manufacturers in Japan with a work force totally dedicated to producing a superior automobile. And this is not a trend existing only in the automobile industry. Do those employed by Panasonic, Mitsubishi, Toshiba, Sony, Hitachi, Sharp, just to mention a few outside the car makers, only use their own company's products? Maybe they do. Is that a nationalistic mania? Do they support the company that supports them, give them jobs, a future? Do workers in other countries and cultures show the same dedication, support, motivation? Try to find the answers by analyzing statistics, crunch the numbers. But rather than that live in this country [Japan] for a few decades. Nationalistic mania does not sound very friendly. Different countries, different cultures, different traits will remain to be different. Try to meet the other side half-way and don't whine.

That's the thing about Capitalism. The person/people/company with the best product wins.

@storm,

You seem to have a disconnect of what some media reports or what the Abe administration wants and what actually goes on here. The Japanese gov has openly stated that they want US products in Japan? is that a laugh? Why not pass the TPP then? Ask any foriegn company rep who is trying to penetrate Japan the obstacles they must overcome. The distribution network protects Japanese domestic makers. Sure, on paper it may seem fair, but anybody who knows situational ethics Japan knows the traps that come latter. They might out of courtesy put a foriegn product out there, but will they push it? Translation,post sales support? Why bother? Better yet, on your way to the eki, count the # of foriegn bikes and scooters, amoungst the hundreds parked in front of any big eki, the # of foriegn makers. I think I counted 1. Count the # of foreign products in any conbini, super or home center. youll find 80 to 90% are Japanese.Why dont you think so many Japanese buy duty free items in Guam and abroad? They cant get them in japan. TPP is supposed to bring a closure to this; the reality is many want it but due to the cultural obstacles, its going to be very difficult to achieve.

How can anyone blame Japan for protecting its own people and interests. Anyone who thinks America wouldn't do the same if the roles were reversed is naieve.

Make reliable cars that the consumers want and they'll buy them. It's not rocket science.

@jeff,

nobody is blaming japan for protecting its people/markets. The world is asking of Japan to play fair. Its not only the Auto industry that is closed, its food industry, machinery, cosmetics, pharms, etc. There are so many products you cannot buy in Japan you can get elsewhere

@hokaido guy

"Not sure what foreign management has to do with anything. In manufacturing, a joint venture is about maximizing profits by avoiding transport costs, sharing distribution channels and logistics"

In the case of Japan, the only way many foriegn companies can penetrate is by creating a joint venture, with Japanese latter owning the company. You see very few wholly owned foriegn subsidiary in Japan; I see many in neighboring countries and plenty of Japanese subsidiary offices throughout Asia.

Cry me a river Mike45. Life isn't fair. America can't compete with other countries so it throws a collective temper tantrum.

@jeff,

I think you got it backwards. The U.S. opens almost every sector to Japan but Japan finds a way to block access to its domestic markets. Nobody is crying, they are asking to play fair...unless thats what you mean by crying.