U.S., Japan have significant gaps on auto market access

Nonsense, Wendy Cutler.

Japanese roads are filled with Mercedes, BMW's, Audis, VW's and Volvo station wagons. They don't have a problem selling in japan. You don't see many US cars because they're crap designs that don't fit the Japanese design sense, and there is no network of dealer support. US carmakers only recently started to offer right-hand drive and radios with the Japanese frequency range. Sheesh, they're still using inches for heaven's sake.

Imagine if Japanese carmakers went to the US decades ago and tried to sell RH drive cars, a radio that didn't work, all of the dashboard controls in Japanese language and no investment in building a dealer and supply/maintenence chain?

Japanese roads are filled with Mercedes, BMW's, Audis, VW's and Volvo station wagons.

Sorry, but this is only because Germany and Sweden threatened to mirror Japan's practice of individually inspecting each and every new car, and increasing the distribution costs of foreign cars. Japan backed down, and removed these barriers to German and Swedish cars.

If you want to buy an American car in Japan, you will have to pay about 1/3 more for it than it would cost in America.

Only 7% of cars on Japanese roads are imports.

Imagine if Japanese carmakers went to the US decades ago and tried to sell RH drive cars, a radio that didn't work, all of the dashboard controls in Japanese language and no investment in building a dealer and supply/maintenence chain?

American car makers have made RHD cars since before the second war. Radios in American cars have been made in Japan since the 70's. Ford has produced some of Europe's best selling cars, like the Cortina, Fiesta, Focus, and the ever popular Combi. All of these were available with RHD, yet, despite all being the world's top-selling cars, you will never see one in Japan.

You cannot easily set up a dealer network in Japan for foreign cars, unless you are one of the aforementioned German or Swedish manufacturers. You need money to open a business, and the Japanese car manufacturers nearly own the banks in Japan. They also control all of the distribution channels. New American cars cost a fortune in Japan for these reasons.

The biggest non-tariff barrier is the US auto companies themselves. How about US companies put a little energy into trying to sell in Japan. Ever see a TV commercial for an American car? Never. There are US auto dealers here in Tokyo. Why don't US cars sell. Well, besides US makers don't bother to make cars the Japanese will like. The Japanese companies are very good at finding out what Americans like and making cars that will sell. They won't be happy until Abe passes a law saying that every Japanese family has to own a US car. Even though they can's sell their quota, Japan should drop quotas.

Sorry I'm too lazy to research what the "significant gaps" and the "non-tariff barriers are.

If someone in the know, knows, could you please explain it?

Please?

@browny1 The main "non-tariff barriers" are Japanese regulations about auto emission and safety standards. Few models made by US companies meet these standards. In other words, US auto makers want to sell polluting and dangerous cars in Japan.

nothing to be scared of. Most US cars are not very good. comparing Us cars to Mercs and BMW's is silly - that's why those brands also sell so much in the US as they are better.

http://www.japantoday.com/category/executive-impact/view/volkswagen-drives-ahead-in-japan

US Automakers: Toyota, Nissan Mitsubishi, Honda, Mazda, Subaru sell their left handle cars in USA and they are not interested to export to Japan. They manufacture left side handle cars in different states in USA

US Automakers: GM. Ford sell their left handle cars in USA and they are interested to export to Japan. They manufacture left side handle cars in mainly Michigan in USA

All US Automakers do not manufacture cars that drivers can use on narrow Japanese streets. None of these USA Automakers manuracture right side handle car so far.

The main "non-tariff barriers" are Japanese regulations about auto emission and safety standards. Few models made by US companies meet these standards. In other words, US auto makers want to sell polluting and dangerous cars in Japan.

This is completely false. Safety and emissions standards are higher in America and Europe than they are in Japan. No car made for the domestic Japanese market may be sold in America, as these cars do not meet minimum safety requirements. Japanese cars sold in America must have heavier bumpers, door reinforcements, and gas tanks relocated before they can be sold in America. No car made in America requires any modification whatsoever to be sold in Japan.

This is completely false. Safety and emissions standards are higher in America and Europe than they are in Japan. No car made for the domestic Japanese market may be sold in America, as these cars do not meet minimum safety requirements. Japanese cars sold in America must have heavier bumpers, door reinforcements, and gas tanks relocated before they can be sold in America. No car made in America requires any modification whatsoever to be sold in Japan.

@sangetsu03: if what you write were true, then why do US makers complain? Fact is that there are different requirements and you cannot cannot simply sell cars made according one country's requirements in the other without making modifications. It goes both ways and when you call it a non-tariff trade barrier, then the US has probably more than Japan. There are discussions ongoing between the relevant authorities in all major industrialized countries on a unification of the (emission) standards, but there is still a very long way to go.

What I'm afraid of is that TPP will rather be a step back in this context. Maybe the partners will agree to accept each other's standards to some extent, on the basis of the lowest common requirements. On the other hand, TPP will cement existing requirements where any future improvements with regard to safety or pollution have to be agreed by all trade partners. Japan or California moving ahead with emission standards like in the past will practically not happen any more.

@sangetsu03, I'm just writing what I see in the press here. So why can't US companies sell more cars? If the US cars are so much better than Japanese cars, people will buy them. I'll buy one.

So what exactly are the "non-tariff" barriers.?

Conflicting answers!

Must be some other reasons than those stated.

.

Safety and emissions standards are higher in America and Europe than they are in Japan.

Except for the fact that just recently, Japan and EU agreed to a safety standard harmonization by 2016.

http://www.yomiuri.co.jp/economy/20150328-OYT1T50062.html

Still, there is no answer to my first question. US made cars are in fact imported to Japan (where there is no tariff) and there are US car dealerships here in Japan. Why don't US cars sell? I day it is because US car makers don't care about the Japanese market. They are looking at the much larger China market, so they put no energy into selling cars here. And they don't make cars for the Japanese market. I maintain that the main not-tariff barier to US car makers is US car makers. They just complain and don't act.

Sorry, but this is only because Germany and Sweden threatened to mirror Japan's practice of individually inspecting each and every new car, and increasing the distribution costs of foreign cars.

The individual inspection is only required (for any importer, from whatever country) when you don't have a type approval. Thus it is only relevant when you plan to import just a few cars, so mainly for small series luxury cars. The same kind of procedure exists in the US and Europe, btw.

If you want to buy an American car in Japan, you will have to pay about 1/3 more for it than it would cost in America.

You know that price is determined by supply and demand, not by cost.

Ford has produced some of Europe's best selling cars, like the Cortina, Fiesta, Focus, and the ever popular Combi. All of these were available with RHD, yet, despite all being the world's top-selling cars, you will never see one in Japan.

These cars were/are developed and made in Europe and it has been Ford's policy for a long time to favour US made models in many markets. It is only since a couple of years that a more globalized thinking started at Ford, and GM for that matter.

In regards to the alleged "individual inspection"'

https://www.mlit.go.jp/common/000997128.pdf

As indicated in the above link ALL CARS (Domestic and Foreign) go through the same procedure under （型式指定制度）except for some IMPORTED cars, there is a "Preferential Handling Procedure" for models that are low volume where they are exempt from the aforementioned procedure. This isn't a non tariff barrier. This is PREFERENTIAL that Japanese government implemented to satisfy U.S. automakers whining.

You folks are all missing the point. The U.S. does not expect to sell a lot more cars in Japan due to TPP. Hell, even if they doubled their share there, it would not make a bit of difference to the companies overall sales levels globally. And, the Japanese market is shrinking anyway. The point here is a symbolic/psychological one. If Obama is going to get TPP approved, he has to appear that he "got tough" on the Japanese, and autos is the best place to do that, especially given how large the Japanese share of the U.S. market is. He stands zero chance of getting his fast-track authority if he cannot say that U.S. auto manufatcurers will have "equal access" to the Japanese market. Otherwise he can kiss support from the "rust-belt" states, which are highly unionized/Democratic, good bye. So, Japan cannot critisize Obama for not getting that fast-track approval, and then not give him something in return -- like they always do in negotiations.

The American auto companies were among the last resisters to the Korea-U.S. (KORUS) Free Trade Agreement, but were finally won over. The auto companies have seen "dramatic" increases in sales in percentage terms, but in actual numerical terms they are miniscule also-rans in Korea.

With the bad taste of the KORUS FTA still fresh, the auto companies do not want to go down this road again. Then democrats need to win Michigan in the presidential election. The labor unions hate the TPP, and so Obama needs help from the Republicans who hate him.

Wendy Cutler has to go through this kabuki to show how the democrats really care about industry. I am convinced, are you?

In other words, US auto makers want to sell polluting and dangerous cars in Japan.

While I don't agree with the "dangerous" here, the first part is right. Main concern of US makers is the progressive taxing with the strong preference of kei cars. The US is the only(?) developed country which has no progressive taxing based on engine displacement or emissions, which results on comparatively large engines developed for and sold in the US market. Although the additional tax burden over the lifetime of the vehicle is rather small compared to the price differences of different cars, cars with such large engines are almost unsellable in Japan. It shows that the psychological control effect of the taxes is more effective than the purely economical impact of the higher fuel consumption. Since the (addressable) market is obviously judged too small to justify developments specifically for the Japanese market, US makers turn instead towards complaining about alleged non-tariff barriers.

As I have posted here many times the best selling imports in Japan in the 70's were US made. They sold around 300,000 units a year. The law for imports became more lax not tightened.

The US automobile manufacturers have about lost any hope in regaining their former glory. The main reason the big 3 is arguing is so the US will not remove the present 2.5% tariff on sedans and a whopping 25% on trucks INCLUDING pick ups. If the big 3 loses this initiative they will go belly up.

US-Japan gaps will always exist. Remember bck in the 80's when Kawasaki & Honda nearly obliterated HARLEY DAVIDSON off its own domestic market? Thanks to "Reaganomics" heavy tarrifs were introduced, then steadily rebalanced itself each fiscal year.

Although this initialy angered japan, the long run shows that quality, luxury, all-american HARLEY'S still lead the pack worldwide. Too bad the same cannot be said of typical american-made automobiles.

Amarican car manufacturer still haven't realised that the "barrier" is globally and caused by not matching customers expectation in design and fuel consumption.

Amarican car manufacturer still haven't realised that the "barrier" is globally and caused by not matching customers expectation in design and fuel consumption.

It must be nice to live in a world of ignorence, so that you can say things that are totally untrue, just to satisfy your preconceived notions. But the fact is that GM is either the #1 or #2 brand in China (neck and neck with VW), and way ahead of any of the Japanese brands. And China is the world's #1 auto market now. Likewise both GM and Ford do well in Europe. So maybe they are "matching customers expectations" afterall.

@jerseyboy

GM in Europe is doing a pitiful job with sliding market shares if you must know. Here is the news.

http://247wallst.com/autos/2015/01/16/gm-continues-to-lose-market-share-in-europe/

GM’s forecast of a profit in Europe next year will be hard to hit, unless it can slash costs to the bone. By doing so, it will severely cripple its chance to ever be a factor in EU car sales again.

both GM and Ford do well in Europe. So maybe they are "matching customers expectations" after all

Customer expectations in Europe (or China) are not necessarily the same as customer expectations in Japan. Suggesting that they are (or should be) isn't going to endear the US brands to Japanese customers.

The fact is why push hard to sell vehicles in a country with a declining population high consumption tax and declining prices makes no sense hell all the japanese automakers complain they can't sell cars here they make their money overseas because of all the factors mentioned above Chevrolet has the best midsize car rating every year they are very nice cars and there midsize SUVs are fantastic just hard to get your hands on one in Japan

Customer expectations in Europe (or China) are not necessarily the same as customer expectations in Japan. Suggesting that they are (or should be) isn't going to endear the US brands to Japanese customers.

Cleo -- agreed. But if you had bothered reading my whole post, you would have seen I was responding to the following:

Amarican car manufacturer still haven't realised that the "barrier" is globally and caused by not matching customers expectation in design and fuel consumption.

As we all know, "Japan is different", and the failures of the U.S. manufavcturers there should not be the basis for someone making an ignorent comment about their "global" competitiveness.

jerseyboy

So you expect Japanese consumers lower their expectation so that it will meet US Auto manufacturer's standards?

Don't hold your breath.

"Japanese roads are filled with Mercedes, BMW's, Audis, VW's and Volvo station wagons."

No they aren't. European market share is only around 5%, and the Europeans have the same complaints the Americans do.

The Euro carmakers had been trying to hold up the EU-Japan free trade talks, saying the Japanese market is rife with barriers.

Wrong, the overall new automobile sales for 2014 excluding trucks, buses and pickup was 2,860,472 units. The overall foreign manufacturers new automobile sales for 2014 excluding trucks, buses and pickup as well as Japanese brands imported from overseas was 288,830. That is 10% of the overall new cars sales in Japan.

"That is 10% of the overall new cars sales in Japan."

The European Automobile Manufacturers Association put the figure of EU-produced vehicles at 4% a couple of years back, despite very active promotion and efforts, and offering some of the world's finest products in terms of quality and engineering.

Since that time, Japan's market has shrunken.

You and other posters may want to read the ACEA's position on the Japanese market, before launching into how US automakers are nothing but cry-babies.

This should get you started http://www.acea.be/news/article/acea-position-on-the-launch-of-free-trade-talks-between-the-eu-and-japan

With the restriction by Japanese goverment, you do not see single foreign auto manufacturing operating independently in Japan. Why is that J-goverment put so much restrictions in the 80's, 90's, and 2000's? There is no GM, Ford, VW, BMW, or MB manufacturing plant in Japan. In Europe, GM employs over 40K European workers, and over 20K alone in Germany. In Europe, with the very similar gas price as Japan, Ford sells well. Many people in this site saids "well, if GM and Ford adapt to what Japanese want, they will buy". Well, look at Korean manufacturers like Hyundai. They build very similar cars to many of the Japanese manufacturers with a right hand drive. And how did their sales add up? Few years ago, the entire Korean manufacturer sold just 500 cars in Japan, and what did Japanese do in South Korea? Japan exported 20,000 cars to South Korea?

What GM and Ford knows very well is that it is a closed market. It's just one way trade and Japan call it free trade. When U.S. vehicle is exported to Japan, the J-goverment has many bogus safety inspections that is not necessary at all. Is Japan really saying U.S. cars are unsafe and you cannot have a standarized inspection? Why do Japan need to review all the U.S. cars when there is no problem in the U.S.?

Again ignorance and naiveness talks hand in hand.

First of all not all European brand made cars registered in the European Automobile Manufacturers Association(EAMA) like the BMW X series that is manufactured in the US or various automobile that are manufactured in East Europe are counted so naturally their figures are skewed. Another interesting part although it will not make much of a difference is the non-offical imports, or parallel imports that goes through a third nation before reaching Japan. These cars are not registered by EAMA since they are considered second hand although they have never been used before reaching Japan.

More with numbers the total amount of Japanese car dealer outlets in Japan is little under 10,000 shops. The total number of car dealers outlets that handles foreign brands is little over 1,000. Basically the dealership is 10 to 1 so market share in volume is also 10:1. If foreign brands relied more on marketing/investment and not some make believe barrier they would sell more with some sweat on their forehead.

Another point in numbers, the best selling US automobile brand last year was Chrysler/Dodge with 8,488 units.GM only sold 2,338 units. Ford sold 4,783 units.