Japan's Kei Cars & Idiotic US Trade Complaints

♠ Posted by Emmanuel in ,, at 4/29/2014 12:27:00 AM
 Adorable Chuki feels bad when meanies call her a "non-tariff barrier" [sniff].
So the gifted orator (or BS artist depending on your POV) Barack Obama came to Japan, saw his nominal allies, and failed to conquer their hearts and minds concerning removing trade "impediments" to concluding the Trans-Pacific Partnership. Purported intra-industry trade barriers in automobiles reared their ugly head again, with the US complaining about Japanese certification of sub-660cc (that's below 0.66 liters) kei cars being a sore point. These vehicles enjoy tax and parking privileges, the latter being a key selling point in crowded Japanese cities. Supposedly, the Japanese market's preference for these tiny vehicles that constitute a third of all passenger vehicle sales constituted a "non tariff barrier" (NTB) to foreign auto sales. As US automakers love to point out, they have a miniscule market share in Japan, hence accusations of protectionism that have helped sink TPP.

My take on this matter is very, very simple. The real issue here is not Japanese "protectionism" against foreign automakers, but of foreign automakers' inability to adapt to the consumer preferences of Japanese motorists. Debates between the Japanese and their gaijin interlocutors revolve on this point, which can be answered in two ways:
Japan has no tariffs on auto imports. Japanese auto executives say the country's unique tastes are a big reason for global auto makers' failure to thrive in the world's third largest auto-buying country, after China and the U.S. Foreign auto executives say the country's preferential tax treatment for minicars and its unique safety and environmental regulations are nontariff barriers that protect the country from foreign competition...
In some ways, the auto industry's love of minicars here is reminiscent of Japanese smartphone makers, which geared features heavily toward Japanese consumers and struggled to make headway overseas. Their shortcomings led to the coining of the term "Galápagos" to describe the market, like the group of islands cataloged by Charles Darwin : uniquely evolved and ultimately at a disadvantage because of its isolation.
To me it's largely an application of the "when in Rome" principle: In automobiles, tastes vary globally, with variations changing depending on the market in question. For instance, Europeans are big on diesels that account for about half of all cars sold. Meanwhile, even with $100/bbl oil, Americans still love to buy hulking, gas-guzzling monstrosities. These are in part due to physiological considerations--they cannot physically help it. In OECD overweight league tables, blubberly Americans literally weigh in biggest of them all, whereas the Japanese hardly have any such people at the opposite end of the scale. In other words, jus' folks in the Jabba the Hutt/Larry Summers weight class have no chance of fitting into kei cars.

Consequently, Toyota and other Japanese automakers aren't dumb enough to sell kei cars Stateside. Instead they sell oversized, inefficient, gas-guzzling lardbuckets such as the bestselling Toyota Tundra in America. Is the Tundra a Toyota mainstay in any other auto market? Of course not since it was built to suit American tastes and girths. Why should anyone with half a brain be surprised to find American cars unsalable in Japan given that most are too big, consume too much petrol which is considerable more expensive in Japan, and are not even right-hand drive to begin with? Ironically, the only American concern that makes money off kei cars is Disney Pixar by marketing products bearing adorable Chuki's image: toys, backpacks, and what is undoubtedly an impressive array of licensed merchandise.

Bottom line: If Americans spent half as much time developing salable kei cars as they did bullying and hectoring Japanese authorities, they'd actually have some market share by now instead of next to none. If you want to achieve something, shut the #$%^ up and get to work. However, I guess that old-fashioned idea has long lost traction in downwardly mobile modern-day America which more often than not plans to get ahead through strong-arm tactics, subterfuge and legal machinations. What's more, I think Mother Earth would be far better off if the rest of the world preferred small, well-formed and cute kei cars for daily transportation compared to the monstrous, bloated and butt-ugly cars made in America.

Saying it's expensive to develop Japan-only cars is no excuse for multinationals. Heck, tiny British sports car maker Caterham sells less than 500 cars annually, but recently had a smash hit developing a kei car roadster, the Seven 160. It looks great and should appear in Cars 3: