Japan, U.S. agree on auto exemption for TPP talks

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  • -5

    JeffLee

    The headline and lead are misleading. It's not a full-out "exemption" but a moratorium, according to the reports. That means that the US will lift its tariffs, just not at the pact's outset.

    However, if Japan doesn't follow thru on its NTBs, like maintaining domestic favoritism for kei cars, I imagine the friction ain't never gonna go away.

  • 10

    nigelboy

    However, if Japan doesn't follow thru on its NTBs, like maintaining domestic favoritism for kei cars, I imagine the friction ain't never gonna go away.

    Hey. I got an idea. How about these lazy U.S. automakers started making these kei cars for Japanese market so there wouldn't be "NTB". Man. I should be a paid consultant!!!

  • 11

    MiuraAnjin

    Those "non-tariff barriers to US autos":

    Japan's roads are much too small for American SUVs

    Likewise for parking spaces

    They insist on driving on the left, in right hand drive cars

    Gasoline is far too expensive, making gas guzzlers unattractive

    Japanese drivers are used to cars with reasonably pleasant interiors

    They do not accept cars that are unreliable and fail the first shaken on safety issues

    If Detroit addressed these barriers, perhaps Tokyo wouldn't have to?

  • 9

    Serrano

    Heck, the Japanese don't need American cars anyway, lol.

  • 6

    hokkaidoguy

    Hey. I got an idea. How about these lazy U.S. automakers started making these kei cars for Japanese market so there wouldn't be "NTB". Man. I should be a paid consultant!!!

    I honestly have no idea why they haven't.

    The first bike I had in Japan was a Japan-only Ducati Monster 400. Ducati built them so they could get a product in the 250cc-400cc license class range, and they were quite successful. I've met a ton of other people who owned one, and all of us wound up buying another (larger) Ducati. In my case, I've bought two.

    Harley calls the license classing system a non tariff barrier. Ducati called it a market opening.

  • 5

    MiuraAnjin

    Well said Nigelboy

    Japan's big three have been designing and building models specifically for the American market for 40 years, and have reaped the benefits in their showrooms. Detroit, however, continues to just design vehicles for Texans.

  • -5

    sfjp330

    Annually, Koreans export 500 cars that are comparable to Japanese cars to Japan and what does Japan do? Export 20,000 cars to South Korea. Even without non tariff barrier, Japan market is closed and the U.S. manufacturer has given up. It is much better if Japan does not ship any dangerous beer can cars to U.S. and U.S. does not ship any cars to Japan. Sounds like a fair trade to me.

  • -2

    sfjp330

    MiuraAnjin Mar. 07, 2013 - 07:51AM JST Japan's big three have been designing and building models specifically for the American market for 40 years, and have reaped the benefits in their showrooms. Detroit, however, continues to just design vehicles for Texans.

    Then why don't you tell me the difference between Mazda 3 and Ford Focus? Same engine, transmission, drivetrain, practically identical car. Annually in Japan, Mazda 3 sells over 200,000 of this car, but sales of Ford Focus is less than 100. Can you tell me why?

  • 5

    hokkaidoguy

    sfjp330:

    Can you tell me why?

    I can. The Ford Focus and Mazda 3 (as well as the Volvo C30 and V40) are all built on the same (C1) platform. The platform was jointly designed by engineers from Ford, Mazda and Volvo.

    Ford, Mazda and Volvo have an agreement with regard to imports and sales targets and dealer networks, which is why you don't see too many Foci on the roads here. But rest assured, Ford still makes money on the deal.

    This kind of thing is a lot more common than most people realize. Mitsubishi and Hyundai had a similar tie-up for decades (but you know that).

  • 3

    MiuraAnjin

    sfjp330

    Yes I can. For utterly selfish reasons Ford Japan elected to only sell US made SUVs through their official dealerships. Those dealers have been crying out for the UK spec Focus for 15 years, but Detroit would not let them have it - until this very month.

    Those <100 Focuses per annum are all grey imports brought in unofficially, against Ford America's wishes.

    Hope that clears things up for you.

  • 1

    Moonraker

    No preferential treatment for anybody, whether cosseted Japanese farmers and insurers or bloated American car producers and subsidised dairy producers, from day one.

  • -2

    sfjp330

    MiuraAnjin Mar. 07, 2013 - 08:43AM JST Ford Japan elected to only sell US made SUVs through their official dealerships. Those dealers have been crying out for the UK spec Focus for 15 years, but Detroit would not let them have it - until this very month.

    Annually, Japan exports around million and a half cars to U.S., and U.S. exports less than 10K cars to Japan. Sounds like a balance in trade for Japan. There are many dealerships in U.S. carry multiple manufacturered cars for sale. Even in Europe, since a decade ago, the new EU regulation law made Europe the most liberal car market in the world. It allowed any EU dealer to sell any car, and allowed any workshop to perform warranty repairs on your car. The supermarkets selling cars had been successful offering big multibrand franchises. Many have 3 to 5 brands under one roof. This allowed dealers to put logos up, and they could sell and service the cars. If automaker can’t control dealers anymore, they will create their own distribution channels. And Japanese automakers, which have a financial interest in virtually all of the countrys auto dealerships, have until recently refused to offer U.S. cars for sale. Of couse, it doesn't happen in Japan.

  • -4

    sfjp330

    Do you know why most people in Japan buy the 2.0 litre or smaller size engine cars besides hight gas prices? Because of the annual J-goverment road tax is expensive for 2.0 or larger engine. The road tax is probably the biggest main deterrant that makes U.S. cars unattractive in Japan. Why don't J-goverment eliminate the road tax so that U.S. cars have better opportunity to sell? On the average, U.S. cars’ engines offer usually more displacement and require heavy tax to be paid. Anything over 3.0L ends up in punitive sha-ken taxation in Japan so it means heavy tax for almost the entire fleet of U.S. cars sold in Japan.

  • 6

    VicMOsaka

    sjjp330,

    If Japan's market is so closed to car imports, then why are there so many European cars on the road ? Benz, BMW, Peugot, Audi, Citroen, Volkswagen, Jaguar, etc. If Japanese people want to buy American cars, there is nothing stopping them. ......................................................................................................................................................................... MiuraAnjin summed it up well with the list of Those "non-tariff barriers to US autos":

  • 3

    ebisen

    All previous comments are right about the special conditions in Japan (street widths, safety and quality requirements, fuel prices). Unfortunately there are other sides to this coin. What the US automakers are claiming (and they agree with the European ones) is different

    For example, how many of you knew that, in Japan, many of the features of a car are not dictated through a law, but through a "technical guideline" basically designed by Toyota and (sometimes) other Japanese makers?

    That is, if some importer tries to import a car with a completely new feature, not available yet in Japan from J Makers, it won't be able to sell that here because, of course, that function, feature, is not yet "technically regulated".

    As far as I know this is the biggest hindrance for the European makers trying to sell their most advanced vehicles here, and failing to obtain the homologation for them.

    Basically: "if it's not invented here, it won't be sold here".

  • 0

    sfjp330

    VicMOsaka Mar. 07, 2013 - 09:28AM JST If Japan's market is so closed to car imports, then why are there so many European cars on the road ? Benz, BMW, Peugot, Audi, Citroen, Volkswagen, Jaguar, etc. If Japanese people want to buy American cars, there is nothing stopping them.

    There is a perception that import sales are increasing, but Imported vehicles include those manufactured overseas by Japanese firms and brought back into the country. The biggest Japanese importer of cars to its domestic market was Nissan. You have to remember that number one VW sold only 55,000 and number two BMW sold only 36,000 cars in Japan. Why don't you compare that to total domestic sales of Toyota, Nissan or Honda. It's just drop in the bucket. How many Toyota alone sell in the U.S.? Few Million?

  • 0

    sfjp330

    U.S. auto companies have export problems to Japan and they have given up. In Japan, Keiretsu is a form of corporate structure in which a number of Japanese companies link together, usually by taking small stakes in each other and usually as a result of having a close business relationship, often as suppliers to each other. The structure, was a way to defuse the traditionally adversarial relationship between buyer and supplier. If you own a bit of your supplier, reinforced sometimes by your supplier owning a bit of you, the theory says that you are more likely to reach a way of working that is of mutual benefit to you both than if your relationship is at arm’s length. U.S. auto companies disliked Japan’s keiretsu because they saw them as a restraint of trade. keiretsu restrains trade because there is a very strong preference to do business only with someone in that Japanese family. In Japan the keiretsu were regulated by specific laws, and they were structured in such a way that cooperation between them was almost compulsory.

  • 3

    MiuraAnjin

    Why doesn't Japan scrap the punitive tax on cars with large capacity engines?

    Perhaps, like EU member states, because they are committed to achieving the CO2 targets set at the Kyoto Summit. Instead of moaning about the tax, how about Detroit make some desirable cars with sub-2liter engines? Just an idea.

  • 1

    kaketama

    good decision. Japanese car makers are making their products in the US because of the high tariff. If the US discards the tariff, these makers will remove their factories to other asian countries where labor cost is much lower. It means the less job opportunities in the US. The US are struggling with the high unemployment rate. This decision, at leaset, won't worsen the situation.

  • 6

    afanofjapan

    sfjp330 You dont get it? Japan taxes big engines; Americans love to look at horsepower figures when buying cars. Its a different market so American manufacturers need to cater to the market. Just like Japanese manufacturers put bigger engines in their American market vehicles, US makers need to start putting some effort into selling in the Japanese market; not just dumping the exact same models.

  • -4

    kevind

    if you want to get down to the brass tacks of this please go buy a new car in japan then go buy a new car in america the amount of b.s. you have to go through here just to even take delivery of the vehicle you buy here in japan is so fing rediculous not to mention if you want any of the options that come standard in the usa you pay through the nose here it was easier for me to build a new home here in japan than it was to buy a new vehicle

  • -1

    JeffLee

    Japan's roads are much too small for American SUVs

    They're also too big for those bulky Toyota Cruisers, which are clearly American sized. But there's a couple in my Tokyo neighborhood anyway.

  • 0

    globalwatcher

    **Japan, U.S. agree on auto exemption for TPP talks **

    LOL. US cars are too big for Japanese roads anyway. Washington is winning on this.

  • 0

    JeffLee

    **If Japan's market is so closed to car imports, then why are there so many European cars on the road ? **

    European cars account for less than 5% of Japan's market share. And the Europeans, who work hard to cater to global markets, have the same list of complaints and frustrations about Japan that the Americans do.

  • 1

    badmigraine

    Lots of great comments here, but I'm puzzled by posters who say the interior of American cars is worse than Japanese ones. While neither is particularly great, Isn't it the opposite? Maybe people are confusing the interiors of US-market Japanese cars with the interiors of Japanese domestic cars. The fit and finish is nice, but except at the luxury/high-line end, the materials, style and feel are cheap, thin, crappy and smallish.

  • 0

    isoducky

    Beyond the arguments road sizes and taxes, lies a couple big issues. Some of the biggest issues are Japan's retail distribution system which is fragmented at best and Japan's overwhelming preference for domestic brands.

    Getting foreign products, in this case cars, into the country is a big hassle as there are many business level hoops to go through such as contacting a supplier, contracting a plant to build options, etc.

    Next big issue is national pride. Even if foreign car makers made cars that cater to Japan, it is very difficult to convince Japanese buyers that the foreign product is superior let alone on the same level as it's Japanese equivalent. This is contrast to the American customer who considers domestic brands, but ultimately wants value out their products.

  • 3

    JaneM

    @sfjp330: Annually, Japan exports around million and a half cars to U.S., and U.S. exports less than 10K cars to Japan. Sounds like a balance in trade for Japan.

    You might want to recognize the fact that most if not all of these cars are produced in the USA for the specific needs of the US market. Their production creats jobs for American citizens, too. If you have followed customer satisfaction reports in recent years, you might also know that Japanese cars produced in the uSA are rated quite well by the consumers there. Guess, all things considered, it is not really "a balance in trade for Japan."

    @sfjp330: . Even in Europe, since a decade ago, the new EU regulation law made Europe the most liberal car market in the world. It allowed any EU dealer to sell any car, and allowed any workshop to perform warranty repairs on your car. The supermarkets selling cars had been successful offering big multibrand franchises. Many have 3 to 5 brands under one roof.

    Yes, but if you bother to look and compare the prices of the EU-produced cars and the Japanese imported cars, you will notice how much more expensive the Japanese cars are and the reason for that is - no surprise here - the taxes levied by the EU on the cars which are not produced there. It is only natural that given the same quality but different prices, most people will choose the cheaper EU-produced option. So, while EU maybe the most liberal car-market in the world, it certainly has its own protectionist policies in place.

    @sfjp330: U.S. auto companies have export problems to Japan and they have given up.

    Or maybe they have not cared to adjust their products to the Japanese market. While it is true that you can create demand for new products, given the above mentioned factors as roads, parking areas, CO2 regulations, etc. in Japan, it is quite difficult to develop a big demand for cars which do not actually make your driving/life easier but the opposite.

    One of the basic market rules, however, has always been "adjust to the market." So I can't see the point of blaming the small sales of American cars in Japan on the Japanese market.

  • 2

    JaneM

    @sfjp330: You have to remember that number one VW sold only 55,000 and number two BMW sold only 36,000 cars in Japan. Why don't you compare that to total domestic sales of Toyota, Nissan or Honda.

    Sorry for the multiple comments, but I just noticed the above and I can tell you that, in addition to the price, one of the resons is the post-purchase service. Two of my friends had VWs, another one a BMW and everytime they scratched or dented their bumpers and decided to have them changed, they had to wait for 2~4 weeks. Of course, they got replacement cars for those periods of time, but none of them felt very happy about having to wait so long to get their cars repaired. I myself drive a Japanese car and when I had the rear bumper changed, it took only fife days - I had the car back by the weekend as I wanted. My car has shown no technical problems in the 7 years I have had it (I have run almost 100,000 km so far) and I will opt for another Japanese car when I decide to change this one. Guess customer satisfaction is a big factor when you decide what to buy next.

  • 0

    depasio

    American car image in Japan = rich / drug dealer /high tax/ hard to maintain/ luxury/ not reliable/ where to buy? / how to buy? / average price unknown?/ Big/ show off/celebrity / sell out/ cool/ Baka/

    JAPANESE car image in America = reliable/ affordable/ easy to maintain / fun/ cheap/ nice/ friendly/ sporty/ fast/ good /

  • 2

    Reckless

    I agree that Detroit has given up on the Japan market but that only makes sense for several reasons: non-tariff barriers, shrinking market, tendency to buy small cars with less profit potential, trend of lack of car ownership by younger persons. If, for example, GM has a budget of 100 million to market and export (or manufacture locally), I think they would be nuts to even waste more than a few percent of that amount on Japan when there is India, Brazil, China, Africa (huge growth potential), etc. Even for Japanese carmakers the Japanese market is secondary. The real meat is developing economies.

  • 1

    SamuraiBlue

    About dealership, if all the imports were to tag up and create a cooperative dealership in Japan that sales all foreign brands there are no laws stopping this to happen. So why not do this kind of coopative slaes relationship? I been in the automobile marketing communcation field for years and drifted this idea many times which get laughed at and/or frowned.

    At the end the foreign auto manufacturers are not willing to cooperate for dealership so why should the Japanese open up theirs?

    There is little investment done by the foreign auto manufacturers to set up new dealership so I doubt it will make any sense.

  • 3

    globalwatcher

    Japan, U.S. agree on auto exemption for TPP talks

    US wants Japanese postal savings and insurance industry. Pretty pleeeeze!!

  • -2

    sfjp330

    JaneM Mar. 07, 2013 - 12:32PM JST One of the basic market rules, however, has always been "adjust to the market." So I can't see the point of blaming the small sales of American cars in Japan on the Japanese market.

    For the last thirty years, Japan's policy has been very consistant with rules on heavy import restrictions of foreign cars. In fact, the import of foreign cars is not that much different than current Japan's immigration policy. Maybe this is why direct foreign imvestment and growth in Japan never grew and has been stagnent for very long time and their long term economy suffers. Unlike U.S. or China, you don't see large diversification of foreign investments in manufacturing in Japan. If Japan accepted companies such as Ford, GM or other large companies to build manufacturing plant in Japan in the 80's or early 90's as a open market, many of these foreign companies would've invested heavily for long term commitment and Japan's economy would've been alot more diversified to downturns. The direct FDI to Japan would've hire thousands of local workers and suppliers to help their business. What China has done over the last two-three decades is a mirror image of what U.S. did in the 70's and 80's. China is following footstep of what U.S. did to make their economy grow and they understand what FDI means. Now almost all foreign businesses are not looking at Japan for investments. We get it, Japan is a closed market.

  • 3

    nigelboy

    Why don't J-goverment eliminate the road tax so that U.S. cars have better opportunity to sell?

    Gee sfjp330. Why stop there? Make bigger roads. Change the speedometer and speed signs to MPH. Make all Japanese vehicles in Japan to have the steering on the left.

  • 0

    Kristianna Thomas

    The TPP seems to be an extention of the NAFTA agreement that was usherd in by the Regan/ Bush Administration, which allowed US manufacturing to skip off the the "Free" Enterprise Zones around the world; mostly in Latin America and led to a whole sale dumping of workers and factories in the the Great Lakes Region. This is the real reason Detroit is such a ghost town with hight unemployment, crime, and poverty. The US Auto Giants and the UAW all cry about lost jobs, but the truth is that the UAW has lost 1,000,000 jobs over the past thirty years through plant closing and lay-offs. The Fat Cats in the UAW cry about the possible lose of 30,000 jobs due to Japan entering into the TPP agreement and Japaneese auto having an unfair advantage. Then the UAW should ask why is General Motors in South Africa investing over one billion Kugerand in new production. The leadership talks a big deal about out souceing and the loss of US jobs to the Auto Industry not retooling in this country;talk is cheap. The Auto Giants don't do anything that does not give them an economic advantage; so what are they really up to? In the 1950's Rockefeller's steel company undersold it s competitors by driving down the price of steel per ton to its lowest price, and then brought out his competitors as they went belly up. They say the dead float. Who in the Auto Industry will be doing the Dead Man's Float?

  • 0

    sfjp330

    Kristianna Thomas...Yes, NAFTA was part of the problem. The agreement stipulated that at least 50% of the foreign exchange requirements should come from exports of auto parts domestically produced. To meet these conditions, automotive companies had to modernize their Mexican plants. At the time, this was fully compatible of U.S. firms to restructure their industrial capacity to face the competition of the small, fuel-efficient, and less expensive Japanese vehicles. In fact, Japanese vehicle manufacturers had been rapidly penetrating the U.S. domestic market, through imports and the establishment of production plants in the U.S. The American companies began to invest millions of dollars in Mexico, building new plants to produce engines. Technology transfer was very significant in this restructuring, and took place mainly through the establishment of these modern plants, The earnings and wages were lower in the new plants which helped the bottom line for short term.

  • 1

    VicMOsaka

    sfjp330M Why don't you compare that to total domestic sales of Toyota, Nissan or Honda. It's just drop in the bucket. How many Toyota alone sell in the U.S.? Few Million?-----------------------------------------------------------------------------------------------------

    I am not comparing the sales of overseas vehicles to Japan's domestic sales. What I am saying is that there are more European cars on the road compared to American cars.

    sfjp330M. How many Toyota alone sell in the U.S.? Few Million?---------Gee, I wonder why, perhaps it is because people like them.

  • 1

    gonemad

    For example, how many of you knew that, in Japan, many of the features of a car are not dictated through a law, but through a "technical guideline" basically designed by Toyota and (sometimes) other Japanese makers?

    @ebisen, would you please tell us how this is different from other countries and why foreign makers cannot participate in the process?

  • 2

    gonemad

    And the Europeans, who work hard to cater to global markets, have the same list of complaints and frustrations about Japan that the Americans do.

    And yet they have the same problem to make a concrete list when asked. Why is this?

    Do you know why most people in Japan buy the 2.0 litre or smaller size engine cars besides hight gas prices? Because of the annual J-goverment road tax is expensive for 2.0 or larger engine. The road tax is probably the biggest main deterrant that makes U.S. cars unattractive in Japan. Why don't J-goverment eliminate the road tax so that U.S. cars have better opportunity to sell? On the average, U.S. cars’ engines offer usually more displacement and require heavy tax to be paid. Anything over 3.0L ends up in punitive sha-ken taxation in Japan so it means heavy tax for almost the entire fleet of U.S. cars sold in Japan.

    As far as I know, the US is the only major industrialized country which doesn't have tax rates increasing with engine displacement, fuel consumption, CO2 emission or a combination thereof. Why do the US only complain to Japan? Why don't they finally adapt to the rest of the world?

  • -1

    SuperLib

    BWM sales in the US in 2012: 347,000.
    BMW sales in Japan in 2012: 56,000

    Why does BMW export all of their crap cars to Japan? If the Japanese liked them, they'd buy them. Or something like that.

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