Why Ford And Other American Cars Don’t Sell In Japan

Summary

Japanese automakers dominate the U.S. market, employing many American workers, yet face a stark contrast in Japan where they struggle to gain a foothold. Despite no tariffs, U.S. automakers, like Ford and GM, are challenged by Japan's closed regulatory process and cultural preferences for compact, efficient vehicles. U.S. cars are viewed as inefficient, and their market share in Japan is minuscule. The Japanese market's unique dealership experience and longstanding perceptions of American cars further hinder their success.

Takeaways

• 🚗 Japanese car brands are very popular in the United States, with several being among the best-selling automakers.
• 🏭 Japanese automakers employ many American workers and build a significant portion of vehicles made in the U.S.
• 🚙 American automakers struggle in Japan, with Ford leaving the market entirely and General Motors maintaining a minimal presence.
• 🛑 Critics argue that Japanese protectionism, including technical barriers, hinders U.S. car sales in Japan despite the absence of tariffs.
• 📉 U.S. automakers have less than 1% market share in Japan, with only a few thousand vehicles sold annually.
• 🏙️ Japanese consumers have specific needs, such as Kei cars, which are not offered by American automakers and account for 40% of the market.
• 🚍 American automakers excel in larger vehicles like pickup trucks and SUVs, which do not align with Japanese consumer preferences.
• 💼 The Japanese car buying experience is highly service-oriented, with dealerships offering a level of hospitality that differs from the U.S. model.
• 🛍️ Japanese buyers often custom-build their cars, a practice that is facilitated by local supply chains and factories, making it difficult for foreign automakers to compete.
• ⏳ Perceptions of American cars as inefficient and unreliable persist in Japan, despite improvements in recent years.
• 🌐 The challenges faced by U.S. automakers in Japan are part of a broader pattern of struggles in various international markets.

Q & A

Why do Japanese brands sell well in the United States?

Japanese brands sell well in the United States because they dominate certain segments in sales and critical acclaim, offering vehicles that meet American consumer preferences and often employing American workers in their U.S. factories.

How significant is the contribution of Japanese automakers to the U.S. vehicle production?

Japanese automakers are significant contributors to U.S. vehicle production, building a third of all the vehicles made in the U.S.

Why are American vehicles not popular in Japan?

American vehicles are not popular in Japan due to a combination of factors including Japanese consumer tastes, perceptions of American cars as inefficient and unreliable, and the dominance of Japanese brands that cater to local needs and preferences.

What is the market share of American automakers in Japan?

All three Detroit automakers have less than 1 percent market share in Japan, with Jeep selling about 10,000 vehicles annually.

What are 'Kei cars' and why are they popular in Japan?

Kei cars are tiny vehicles preferred by drivers who navigate narrow streets and crowded cities in Japan. They make up 40 percent of the Japanese market, and U.S. automakers do not produce them.

How do Japanese dealerships differ from American dealerships in terms of customer service?

Japanese dealerships offer nearly white glove service, including amenities like cafes and complimentary car washes, and follow up with customers even years after a purchase, which is a stark contrast to the traditional buying experience in the U.S.

What role do technical barriers play in the difficulty U.S. automakers face in selling in Japan?

Technical barriers, such as a closed regulatory compliance process and different standards, make it harder for U.S. companies to sell in Japan, despite the absence of Japanese tariffs on U.S. imports.

How have perceptions of American cars influenced their sales in Japan?

Perceptions of American cars as inefficient and unreliable, stemming from the 1960s through the 1980s, have influenced their sales negatively in Japan, despite improvements in recent years.

What challenges do U.S. automakers face in international markets outside of Japan?

U.S. automakers face challenges in various international markets including South America and Europe, and China, the world's largest car market, is becoming tougher due to slowing economic growth, increased competition, and trade disputes.

What is the historical context behind the Japanese preference for efficient and reliable vehicles?

The historical context is rooted in the rise of Japanese automakers, who gained a reputation for building solid, efficient cars that don't break down, while American automakers faced criticism and scandal over less reliable vehicles during the same period.

What could be the future implication for U.S. automakers if they continue to struggle in international markets?

If U.S. automakers continue to struggle in international markets, they could become primarily American companies that sell trucks and SUVs to Americans, missing out on global growth opportunities.

Outlines

00:00

🚗 Japanese Automakers' Dominance in the U.S. and Challenges in Japan

Japanese car brands are highly successful in the United States, with several being the best-selling automakers. They not only sell well but also employ many American workers and contribute to a significant portion of vehicle production in the U.S. However, the reverse is not true; American automakers struggle in Japan, with Ford leaving the market entirely in 2017 and General Motors maintaining a minimal presence. Critics, including President Trump and U.S. automotive trade associations, argue that Japanese protectionism and technical barriers hinder U.S. sales in Japan. The regulatory process in Japan is more closed, with Japanese producers and suppliers having more influence. Industry experts suggest that the lack of U.S. car presence in Japan is due to Japanese consumer preferences, stereotypes about American car quality, and unique purchasing habits. Japanese brands dominate the local market, with over 95% of cars sold being Japanese, and Kei cars, which are not produced by U.S. automakers, making up 40% of the market. American automakers have also scaled back compact vehicle production, focusing more on larger vehicles that are less popular in Japan. The Japanese car buying experience is also vastly different, with a focus on service and customization, which foreign automakers have found challenging to adapt to.

05:00

🌏 Historical Perceptions and Global Challenges for American Automakers

The historical perception of American cars in Japan as inefficient and unreliable, stemming from the 1960s to 1980s when vehicles like the Chevrolet Vega and Ford Pinto faced criticism, still lingers. Despite improvements in fuel efficiency and reliability, this image affects the appeal of American cars in Japan. Japanese automakers have built their reputation on producing solid, efficient vehicles, which contrasts with the historical image of American cars. American manufacturers argue that they could compete better in Japan if business barriers were removed. However, Japan is not the only international market where U.S. automakers face challenges; they also struggle in South America and Europe. The Chinese market, the world's largest, is becoming tougher due to economic slowdowns, increased competition, and trade disputes. If the situation does not improve, U.S. automakers risk becoming primarily domestic sellers of trucks and SUVs.

Keywords

💡Japanese automakers

Japanese automakers refer to the car manufacturers based in Japan, which are known for their high-quality, fuel-efficient, and reliable vehicles. In the context of the video, these brands have a significant presence in the United States, with several being the best-selling automakers. They also employ many American workers and contribute to a third of all vehicles made in the U.S. Examples from the script include brands like Toyota, Honda, and Nissan, which are popular for their sedans, SUVs, and pickup trucks.

💡American workers

American workers in this context are the employees in the U.S. who are part of the workforce in factories that manufacture Japanese cars. The video highlights that Japanese automakers have a substantial impact on the U.S. economy by providing employment to a large number of American workers. This is exemplified by the fact that these companies build a third of all vehicles in the U.S., indicating a significant contribution to the local job market.

💡Detroit automakers

Detroit automakers, also known as the 'Big Three,' refers to the major American car manufacturers: General Motors, Ford, and Fiat Chrysler Automobiles (formerly Chrysler). These companies are based in and around Detroit, Michigan, and have historically dominated the U.S. automotive industry. The video discusses their struggle to gain a foothold in the Japanese market, with Ford leaving Japan entirely in 2017 and General Motors maintaining only a minimal presence.

💡Technical barriers

Technical barriers are non-tariff measures that can restrict or limit the sale of imported goods, such as complex regulations and standards that differ from those in the exporting country. In the video, critics argue that these barriers make it difficult for U.S. automakers to sell their vehicles in Japan, despite the absence of direct tariffs. This is part of the broader discussion on trade imbalances and the challenges faced by American car manufacturers in the Japanese market.

💡Kei cars

Kei cars are a class of small vehicles in Japan, known for their compact size and lower tax and insurance costs. These vehicles are particularly popular due to the limited space available in Japanese cities and the need for maneuverability in tight urban environments. The video mentions that Kei cars make up 40 percent of the Japanese market, a segment in which U.S. automakers do not participate, contributing to their limited presence in Japan.

💡Market share

Market share refers to the percentage of total sales in a given market that a particular company or product line can claim. In the video, it is noted that all three Detroit automakers have less than 1 percent market share in Japan, indicating a minimal presence and influence in the Japanese automotive market. This is contrasted with the dominance of Japanese brands, which sell remarkably well in the U.S.

💡Regulatory compliance

Regulatory compliance in the context of the video refers to the process by which companies must adhere to the rules and regulations set by the government regarding fuel economy, safety, and other standards. The video suggests that in Japan, this process is more closed off, with less input from external companies compared to the U.S., where all automakers that sell and produce in the country are part of the regulatory conversation.

💡Consumer tastes

Consumer tastes refer to the preferences of customers when purchasing products, which can be influenced by cultural, economic, and practical factors. The video discusses how Japanese consumer tastes lean towards smaller, more efficient vehicles, which are better suited to the country's crowded cities and limited parking spaces. This preference contrasts with the larger vehicles, such as SUVs and pickup trucks, that are popular in the U.S. and are typically produced by American automakers.

💡Stereotypes

Stereotypes in this context are the fixed, often oversimplified, ideas about a particular type of vehicle or brand. The video mentions that Japanese consumers have an abiding, if outdated, stereotype about American cars being inefficient and unreliable. This perception, which originated from the 1960s to 1980s, continues to influence the Japanese market's reception of American vehicles, despite improvements in U.S. car quality and efficiency.

💡Service and hospitality

Service and hospitality in the context of the video refer to the high level of customer service and the welcoming atmosphere provided by Japanese auto dealerships. The video contrasts the Japanese car buying experience, which is characterized by nearly white glove service and customization options, with the more transactional experience common in the U.S. This difference in approach to selling vehicles is suggested as one of the reasons foreign automakers, including those from the U.S., have difficulty adapting to the Japanese market.

Highlights

Japanese car brands are very popular in the United States, with several being the best-selling automakers.

Japanese automakers employ a large number of American workers and build a third of all vehicles made in the U.S.

Japanese market shows little interest in American vehicles such as SUVs, pickup trucks, and muscle cars.

Ford left Japan in 2017, and General Motors sold only 700 cars in Japan in 2018.

U.S. automotive trade associations criticize Japanese protectionism, citing technical barriers to U.S. companies.

Japanese regulatory compliance process is closed, with limited input from external companies.

Japanese consumer tastes and perceptions about American car quality may contribute to the low sales of U.S. cars in Japan.

Japanese market is dominated by local brands, with over 95% of cars sold being Japanese.

Kei cars, small vehicles popular in Japan due to space constraints, are not made by U.S. automakers.

American automakers have scaled back compact vehicle production, focusing on larger vehicles.

Japanese dealerships offer a high level of service and hospitality, which contrasts with the American buying experience.

Japanese buyers can custom-build cars from catalogs, a practice foreign automakers struggle to adapt to.

Japanese consumers have a longstanding view of American cars as inefficient and unreliable.

American automakers argue they could compete better in Japan if business barriers were removed.

U.S. automakers face challenges in other international markets beyond Japan, including South America and Europe.

The potential for China, the world's largest car market, to become a tougher place for U.S. automakers to do business.

The risk of U.S. automakers becoming primarily domestic sellers of trucks and SUVs to Americans.

Transcripts

When it comes to cars, Americans seem to love the Japanese.

But the Japanese don't seem to love Americans back.

Japanese brands sell remarkably well in the United States.

Several of the best-selling automakers in America are from Japan, and

their products seem to dominate entire segments in sales and critical

acclaim. Japanese automakers sell so many cars in the U.S.

that they actually employ vast numbers of American workers in factories

around the country.

Japanese automakers actually build a third of all the vehicles made in the

U.S. But the Japanese don't seem to be interested in America's SUVs,

pickup trucks, muscle cars or just about any vehicle made by Detroit.

Ford left Japan entirely in 2017.

General Motors keeps a presence there, but it is tiny — the largest U.S.

automaker sold only 700 cars in Japan in 2018.

And people are divided as to why and what, if anything, should be done

about it.

President Donald Trump has criticized the imbalance, but so have U.S.

automotive trade associations, who blame Japanese protectionism.

While there are no Japanese tariffs on U.S.

imports, a number of critics say there are all kinds of technical barriers

that make it harder for U.S.

companies to sell in Japan.

Here in the United States, when we set regulations for fuel economy or

safety or communications standards or whatever, all of the automakers that

sell and produce in the United States are party to that conversation.

In Japan, it's a much more closed process for regulatory compliance.

It's "these are the rules and you will meet the rules."

Japanese producers have input into that and suppliers, but it's pretty

closed to any external companies that would be doing business there.

But some industry experts say that really isn't the problem.

Instead, the reasons U.S.

cars are so rare in Japan, which is the world's third-largest car market,

have more to do with Japanese consumer tastes, the abiding if outdated

stereotypes the Japanese have about the quality of American cars, and the

very different way customers shop for vehicles in Japan.

It is first important to note that Japanese brands all but completely

dominate local roads.

More than 95 percent of all cars sold in the country are Japanese.

Imports make up the balance and most of those are higher-end European

luxury vehicles and sports cars.

This is partly because the Japanese have pretty specific needs.

For one thing, space is incredibly tight.

Wildly popular in Japan are these so-called Kei cars, which are tiny

vehicles preferred by drivers who have to thread their way through narrow

streets and crowded cities.

Kei Cars alone make up 40 percent of the Japanese

market and U.S.

automakers don't make them.

Americans, on the other hand, tend to excel in making big vehicles,

particularly pickup trucks and large sport utilities.

In recent years, American automakers have scaled back or even entirely

killed off their own lines of compact vehicles, which are often still

bigger than their Japanese counterparts.

In fact, many of the Japanese vehicles sold in America — from sedans such

as the Toyota Camry all the way up to the pickups — are not even

particularly popular in Japan.

All three Detroit automakers have less than 1 percent market share.

One of the bestsellers, Jeep, sells about 10,000 vehicles in Japan a year.

The Japanese car buying experience would also likely shock many Americans,

who often view a trip to the dealership as one of life's necessary evils.

Much of Japanese business culture is built around service and hospitality,

and auto dealerships are no exception.

Japanese dealerships offer customers nearly white glove service, and the

way buyers choose cars is entirely different from the traditional buying

experience in the U.S.

Whereas American shoppers will often choose a car from what is available

on a dealer lot, Japanese buyers can often custom-build a car out of a

catalog and then have it made for them in a matter of weeks.

A strong local supply chain and local factories allow Japanese automakers

to do this.

Furthermore, quality of service is often quite high.

Dealerships frequently have amenities such as cafes and complimentary car

washes. They will also follow up with customers sometimes even years after

a purchase.

Foreign automakers overall have had difficulty adapting to this way of

selling. Moreover, the Japanese have longstanding perceptions of American

cars as inefficient and unreliable.

This somewhat outdated view originates in the decades from the 1960s

through the 1980s, when Japanese brands were ascending and American

automakers were plagued with criticism and scandal over vehicles such as

the Chevrolet Vega, the AMC Gremlin, the Ford Pinto and the Chevrolet

Corvair.

And though American manufacturers have made far more fuel-efficient engines

in recent years, the U.S.

has historically made some gas guzzlers when compared with cars made

elsewhere.

Yeah, I think there is a hangover for American vehicles.

You know, what does an American car say about you in Japan.

That baggage is carried with that.

Meanwhile, the Japanese rose to power in the auto industry in large part on

their reputation for building solid, efficient cars that don't break down.

Of course, many observers note that American autos have done a lot to

close the reliability gap over the years, and cars overall are able to log

far more miles on the road than they did even a decade ago.

And U.S.

automakers are adamant that they would be better able to compete in Japan

if the country removes barriers that make doing business difficult.

The trouble for Detroit is that Japan is just one of the international

markets where U.S.

automakers have struggled.

All three Detroit automakers have had challenges in South America and

Europe. While China which is the world's largest car market could become a

tougher place to do business with slowing economic growth, increased

competition, and trade disputes.

If something doesn't change, U.S.

automakers could become just that: American companies that sell trucks and

SUVs to Americans.