Not Sold in Here : Japanese Cool to Idea of Importing U.S. Cars, Parts

Nissan car salesman Akira Harada’s perception of U.S.-Japan negotiations on trade in automobiles and auto parts is that the American position doesn’t make much sense.

“Simply insisting ‘Buy! Buy!’ is useless,” he said. “And it’s ridiculous for the United States to demand that our government require dealers to sell American cars.”

Harada himself, however, may be a good example of what Americans like tocall a “non-tariff trade barrier” in Japan. Not only is he uninterested in buying an American car, but he also wouldn’t want to sell one.

“If I were told I could sell whatever I want, I wouldn’t suggest American cars to customers,” Harada said. “This isn’t a business where just selling is enough. You have to think about service and repairs. It’s just common sense. Which cars will be less trouble?”

Harada’s attitude is based both on the belief, still fairly common in Japan, that American cars are less reliable than Japanese models, and also on the fact that replacement parts and servicing are not readily available in many parts of the country.

But for some Japanese, such as interior design worker Masaro Miyoshi, 60, there is an attractive cachet to American vehicles.

“I’d like to try driving a foreign car,” Miyoshi said while looking over Fords at a dealership in Tokyo, adding that he was having trouble finding a model that exactly fit his needs.

Thus, a key U.S. goal in the trade talks--which have turned acrimonious in recent weeks--is to push Japan to loosen the ties between Japanese auto firms and dealers so there will be more places where people like Miyoshi can get a good look at foreign cars.

Dealerships here often are fully or partially owned by Japanese auto makers. U.S. negotiators hope to get more floor space for imports at some of these dealerships. More important, Washington wants Japan to encourage the growth of completely independent dealers carrying competing models.

“The lack of independent franchise dealerships is an inhibition to the import of cars into Japan,” Undersecretary of Commerce Jeffrey E. Garten said at a recent Tokyo news conference. “We believe that all the American manufacturers and, indeed, foreign manufacturers generally, would benefit by an increase in independent dealerships along the lines that exist in the States.”

Winning greater access to dealer floor space is one way the United States hopes to address its dramatic deficit in automotive-sector trade with Japan, which hit $36.7 billion last year--more than half of the total $65.7-billion U.S. trade deficit with Japan.

Other key goals of the talks, which resume this week in Tokyo, are to boost sales of U.S.-made auto parts for use in new-vehicle assembly and, separately, of parts for sale in the aftermarket for service and repairs.

The huge bilateral trade imbalance is a key factor behind the recent dramatic strengthening of the yen, which has risen nearly 20% in value against the U.S. dollar since the beginning of the year. The weaker dollar, however, should in the months ahead make U.S. vehicles and auto parts even more price-competitive in Japan.

The Clinton Administration is threatening to impose billions of dollars worth of trade sanctions--which possibly could be revealed as early as next month--if a broad improvement in foreign access to Japan’s automotive market is not achieved.

The sanctions threat is formally pegged to the narrowest and perhaps least important issue on the table: Japan’s labyrinth of bureaucratic rules that limit how easily foreign auto parts can be sold here for use in servicing and repairs.

Washington argues that loosening of Japan’s rigid system of periodic auto inspections, including more flexible rules for service garages, would benefit both U.S. manufacturers and Japanese consumers.

“If the market were open, Japanese would not have to spend two to three times what Americans do for auto parts,” Ira Shapiro, general counsel for the U.S. Trade Representative, said recently in Tokyo.

“The average cost of fixing a muffler in Japan is $240, as compared to $100 in the United States.”

Pressured heavily by the U.S. government for many years, Japanese manufacturers have already boosted their purchases of U.S.-made auto parts fairly significantly. The value of such imports to Japan has grown from $1.5 billion in 1989 to about $3 billion last year, while purchases by Japanese operations in the United States soared from $5.6 billion in 1989 to about $16 billion last year.

The U.S. side has made it clear that “voluntary plans” by Japanese car makers to buy more U.S.-made parts, plus efforts by the Japanese government and Japanese manufacturers to ensure that more dealers carry foreign models, would go a long way toward removing the risk of trade sanctions over the replacement parts issue.

While perceptions in the United States are that Japan doesn’t play fair in auto trade--exporting huge volumes while maintaining a protected market at home--many Japanese argue, as they have for years, that U.S. car manufacturers still aren’t trying hard enough.

“The U.S. government’s unproductive criticism of Japan is only succeeding in stirring up anti-American sentiment among the Japanese people,” Nikkei Shimbun, Japan’s leading financial daily, declared in a recent editorial.

Tokyo notes that European manufacturers that set up their own dealer networks have fared much better in Japan than Detroit’s Big Three, citing this as evidence that the market here is open to imports. Japanese officials also note that there are still only two vehicle models with right-hand drive sold in Japan that are made in the United States by U.S. manufacturers: Chrysler’s Jeep Cherokee and the Ford Probe.

Honda’s U.S. subsidiary is by far the largest exporter of U.S.-built cars to Japan, shipping 47,296 vehicles last year, compared to 13,580 by second-ranked Chrysler.

While the U.S. side acknowledges a history of insufficient efforts and lower quality in both autos and parts, it argues that this has now changed. It attributes Honda’s leadership in shipping U.S.-built cars to Japan primarily to established business ties and dealer outlets.

U.S. manufacturers have pledged to produce more right-hand drive models for the Japanese market in the next few years.

Times researcher Megumi Shimizu in Tokyo contributed to this report.

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Exports to Japan

General Motors, Ford and Chrysler trailed Honda, which topped the list of U.S.-built automobiles exported to Japan last year. Auto shipments from the United States to Japan in 1994, including Hondas from Ohio and Toyotas from Kentucky, in thousands:

Honda: 47.3

Chrysler: 13.6

Ford: 12.0

Toyota: 9.9

General Motors: 8.7

Source: Japan Automobile Importers Assn.