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Trump Wants More American Cars in Japan. Japan's Drivers Don't.

Yoshihiro Masui's growling Ford hot-rod, its sides adorned with the Stars and Stripes, attests to his love of American cars – an unusual passion in Japan, where Toyota, Honda and other domestic brands rule the roads.

"Japanese cars don't break down, but they're boring," said Mr. Masui, 67, a semiretired music producer. Besides the hot-rod – a replica Model T with a racecar's engine – he owns a gleaming white Ford Thunderbird, the latest of nearly 70 Detroit-made vehicles he figures he has bought and sold over the years.

"You definitely stand out," he said.

Detroit pines for a day when the sight of an American car on a Japanese street is not so notable.

Even as Japanese cars have taken a wide portion of the United States market, American brands are barely visible in Japan, a situation that has long frustrated American auto executives and trade negotiators and has become a renewed source of political friction under President Trump.

Mr. Trump accuses Japan of shutting American producers out, by throwing up regulatory barriers and rigging the currency market in favor of Japanese brands. "They do things to us that make it impossible to sell cars in Japan," he said in a meeting with American executives last month.

Such talk is alarming in Japan, where the auto industry is a pillar of the economy. When Prime Minister Shinzo Abe meets Mr. Trump starting on Friday, averting a trade war will be at the top of his agenda. Mr. Abe's government has been floating proposals, like using Japanese pension money to fund Mr. Trump's infrastructure plans, that might mollify the president and help offset Japan's large trade surplus.

To the Japanese, Mr. Trump's accusations about trade barriers can seem bizarre.

"Of course American cars don't sell in Japan," said Mr. Masui, whose admiration for American vehicles does not extend to their manufacturers' marketing strategies.

"American cars have a bad image – they aren't fuel-efficient, they break down," he said. "That's not really true anymore, but dealers don't make an effort to convince people. I've never seen a TV commercial. You go to a car show, they're not there."

The cars are certainly not on the streets. Of the nearly five million cars and light trucks sold in Japan last year, just 15,000 were American, or 0.3 percent. Toyota sells more vehicles at a single mega-dealership in California.

Masato Suzuki manages a car dealership in Machida, a suburb west of Tokyo, that specializes in American imports. His lot is lined with hulking Lincoln Navigator S.U.V.s, full-size commercial vans and muscle cars like Dodge Chargers and Ford Mustangs. These are the sort of American vehicles that people buy in Japan, when they buy them at all. He says his customers are overwhelmingly men.

"I mean this affectionately, but they're a bit unusual," he said. "I suppose we're a bit unusual to sell these cars, too."

Mr. Suzuki's dealership, Glide, opened 24 years ago, when Detroit's reputation for quality was at a low. "The cars broke down all the time. Customers were always angry at us," he said. Glide has since opened two branches, but they deal only in European cars, which are more popular in Japan.

Mr. Suzuki said he would like to expand his offerings to smaller, more budget-friendly American vehicles – the kind that are the staple of Japan's own auto industry, and which most Japanese drive. But he doesn't think they would sell.

Ingrained skepticism about American cars' reliability and fuel efficiency is one problem. Another is price. Mr. Suzuki said he did not know whether Japan was deliberately weakening the yen, as Mr. Trump claims, but he agrees with the American president that a stronger Japanese currency is better for American car sales.

When the yen soared after the 2008 global financial crisis, making imports cheaper for Japanese buyers, Glide was importing about 100 vehicles a month. Now, with the yen weaker again, it brings in only one-tenth as many.

"Most of the time, for the same money, a Japanese car is a better deal," he said.

Defenders of Japan's trade practices note that Japan imposes no border taxes on cars, whereas the United States adds a 2.5 percent tariff to Japanese imports. And they point to the relative success of European brands. Mercedes-Benz, BMW and others have captured about 6 percent of the Japanese market, mostly at the luxury end.

"German cars are popular in Japan, but American cars hardly sell at all," Akio Mimura, chairman of the Japan Chamber of Commerce and Industry, said at a news conference this month. "If they're going to sell cars in Japan, it's obvious that they need to make an effort to appeal to Japanese customers."

Yet, even European carmakers complain that the Japanese market can be tough going, with taxes, safety standards and other rules that they think favor domestic producers. Negotiators for the European Union are pressing Japan on such structural issues in talks over a proposed trade accord.

An example is headlights. In many countries, it is standard practice for drivers to keep their headlights on during the day, for safety reasons. Many cars' daytime running lights switch on automatically as soon as the engine is started.

Japan, though, took the opposite approach for years: Keeping headlights on during the day was illegal. That meant foreign carmakers had to disable the automatic feature on cars they exported to Japan, an extra production stop that added to costs.

Kenji Kobayashi, executive director of the Japan Automobile Importers Association, which represents foreign car companies in Japan, says structural barriers are lower than they used to be. Japan scrapped the prohibition on daytime running lights last year, after negotiations with the association.

It is also reducing the tax advantages it gives to a category of microcars known as kei cars, which account for about a third of domestic sales and are made only by Japanese automakers. The change is making a difference: Kei sales dropped 9 percent last year.

Mr. Trump's approach to trade is arguably slowing progress.

During negotiations over the Trans-Pacific Partnership, the Pacific Rim trade deal Mr. Trump abandoned after taking office, Japan agreed to recognize more American auto safety standards and streamline certification procedures for imported vehicles. But now that the United States has pulled out, those concessions are at risk.

Mr. Kobayashi sees a difference between European and American efforts to woo Japanese car buyers. European brands advertise aggressively and have done more to customize their products for Japan, for instance by producing right-hand-drive versions of their vehicles – a seemingly obvious selling point, in a country where the driving lane is on the left, that American producers have long been criticized for ignoring.

The best-selling American brand in Japan is Jeep, which last year accounted for close to half of all American auto sales there. It offers right-hand-drive vehicles – a legacy of the customized delivery vehicles it once made for the United States Postal Service, which let drivers step out onto American curbs instead of the road.

Catching up to the Europeans would require investments that American carmakers are increasingly reluctant to make, Mr. Kobayashi said. Ford scrapped its small dealer network last year, and is focusing in China.

"China is big and growing, and foreign brands are putting their efforts there," Mr. Kobayashi said.

Mr. Masui, the car collector with the souped-up Model T, says he loves "everything about America before the 1960s – cars, furniture, music, everything." He might well get along with President Trump. But he says American automakers should stop complaining about trade barriers and focus on more basic tasks: making attractive cars and persuading people to buy them.

"Mr. Trump is interesting," he said, "but what he says about cars is just weird."

[Source: By Jonathan Soble, The New York Times, Tokyo, 09Feb17]

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