A Hollow Victory

Last year over 10 million new cars and trucks were sold in the United States. Over half of that was sold by Japanese companies, especially Toyota, Honda, and Nissan.

In Japan, the world's third largest auto market, Ford, GM and Chryler sold about 8000 cars last year. Yes, you read that right. 8000.

The Japanese will tell you that they have an open market, with zero tariffs on cars from the U.S. While that is true, the Japanese are the masters of the NTB (Non Tariff Barrier), and have employed a variety of regulatory (and smartly, WTO-compliant) measures to keep Japan the most closed auto market in the world. When pressed about this, the Japanese always revert back to: Detroit doesn't build cars that Japanese want to buy, and the cars are of poor quality. It's the market, baby, the market!

That may have worked in the days when Explorers and Hummers prowled the showrooms, but with world-class cars like the Ford Fiesta coming online, it's hard to believe that Japanese consumer tastes alone account for the gross trade imbalance. That brings us back to those NTBs.

Here's an example: Japan is doing a version of cash for clunkers. U.S. cars flat out don't qualify. Now, keep in mind that when the U.S. first proposed cash for clunkers, the program was limited to cars made in the U.S. (which includes many Toyota and Honda models, by the way). Under pressure from importers, the U.S. opened the program to all eligible cars and all told, 319,300 cars were sold under cash for clunkers to Japanese brands, about half the total. U.S. automakers and the government protested Japan's decision, and yesterday the Japanese government agreed to allow U.S. carmakers to qualify for Japan's program. The expected impact? A few hundred extra cars will be sold to add to that 8000 total from last year.

I guess when you're dealing with an adversary such as this, you take your victories where you can.

Japan opens 'cash for clunkers' to Detroit's Big Three | detnews.com | The Detroit News