U.S.-JAPAN TRADE SHOWDOWN : Dealer Disincentives : Japanese See Little Demand for U.S. Cars
Jonan Auto Service Co., a car repair shop that sells vehicles as a major side business, could sell any American car its Japanese customers wanted.
Problem is, it says, few of them want U.S.-made autos.
American cars don’t sell well here in part because consumers think the vehicles are too big for narrow Japanese roads and small garages and too prone to breakdowns, said Rikitaka Sakurai, an assistant to the president of Jonan, which is among many Japanese auto repair shops that sell cars.
U.S. auto makers are going to have to do more than “just order Japanese to buy their cars,” Sakurai said, referring to the current U.S.-Japan auto trade dispute.
Such views are typical of many Japanese who sell cars. Detroit’s Big Three, they say, have still not begun designing cars to match the needs of the Japanese market, nor have they made adequate efforts to set up showrooms here or to match the guarantees offered by Japanese auto makers.
Until they take these and other steps, they say, no negotiations at the governmental level are going to be successful.
U.S. auto officials such as Andrew H. Card Jr., president of the American Automobile Manufacturers Assn., disagree. Their market research shows that “there are hundreds of thousands of Japanese consumers who would choose the quality, styling, value and enhanced safety features of U.S. vehicles if they could find them” at dealers’ shops in Japan, Card said.
Chrysler Corp. will announce today that it is bolstering its distribution network in Japan and is acquiring a Japanese auto dealership, a source familiar with the company told Bloomberg Business News. Chrysler sold 20,000 cars and light trucks in Japan last year and has set a goal of 100,000 by the end of the decade.
Japanese auto salespeople agree with U.S. government negotiators that individual Japanese auto dealers, owned wholly or partly by Japanese manufacturers, are reluctant to handle American cars.
Because Jonan Auto is not affiliated with any manufacturer, it can arrange for the sale of any car--without limitations--a customer might wish to order. As such, Jonan ranks among the more neutral Japanese companies involved in auto sales here. And with sales of about 150 vehicles a year--including passenger cars from a dozen Japanese and foreign manufacturers and even a 10-ton truck last year--Jonan ranks among the largest sales facilitators in Japan.
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But in the last two years, Sakurai said, “we’ve sold only one American car. . . . That was a [Ford] Mustang. We delivered it last Wednesday. The buyer was an older Japanese, the president of a small company who remembers the original Mustang.
“Usually, the size of an American car is too big. And then, on top of that, the steering wheel is on the left,” Sakurai complained. “That’s an immense impediment.”
Althoaugh the Big Three have all announced plans to equip models sold here with right-side steering wheels, only two U.S.-made models offer them now.
Kiyozo Otaki, head of the repair shop at Kyowa Auto Industry, a sales agency in the Omori section of Tokyo, faults Detroit for stressing sales and neglecting service. U.S. auto makers don’t match the typical new-car guarantee of free repairs for five years or 62,500 miles offered by Japanese manufacturers, he said.
Even if trade negotiators agree to bring more American cars into Japan, “it won’t do any good unless somebody buys them,” Otaki said. None of the customers of Kyowa, which, like Jonan, acts an an agent to arrange sales, “have ever asked for an American car,” he said.
“And as long as our customers don’t want them, I have no intention of handling American cars,” Otaki said.
In the showroom of a Nissan dealership in Tokyo’s Shirogane section, five salespeople, speaking on condition that they not be identified, said any decision to handle American cars would have to be made by the headquarters of Nissan Motor Co., which owns the outlet.
But it was clear that the idea of handling American cars--or, indeed, anything other than Nissans--was an alien concept.
Nissan, which has been operating in the red for the last three years, is having enough trouble selling its own cars without bringing competitors’ models into its showrooms, a salesman said.
“Japanese like the styling of foreign cars, and if we displayed foreign models sales might flow away from Nissan,” he said.
“This is a fairly upscale neighborhood, and we feel foreign cars compete with our top models,” a saleswoman said. “But frequently foreign cars are too big for the narrow streets of Tokyo or won’t fit into a garage.”
Salespeople visit homes in the neighborhood, particularly those of customers who have previously bought cars from Nissan Shirogane, she said.
Indeed, throughout Japan, about 70% of car sales are made through home visits, said Naoki Yamaguchi, president of Aichi Toyota Motor Co., a large chain of dealer outlets in the Nagoya area.
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“Visits by salespersons and personal ties remain the chief factors in Japanese marketing,” Yamaguchi said.
That, he added, is one reason “dealers in Japan simply don’t have the resources to [build] separate sales outlets to handle American cars. Nor can they be sure that they could earn a profit on the American vehicles if they did set up sales outlets.”
Yamaguchi said his firm has refused to set up separate sales outlets for American cars because “the products and terms on offer simply don’t make business sense.” But he said his Aichi Toyota will begin selling GM Cavaliers--along with Toyotas--next year.
Toyota’s handling of General Motors’ cars came from an agreement at the headquarters level of the two firms. It is one of a series under which selected dealers of major Japanese auto firms will sell U.S. products.
In addition to the Toyota-GM agreement, Nissan and Mazda are selling Fords, Honda is handling Chryslers, and Suzuki has teamed up with France’s Peugeot.
No breakthroughs in sales have occurred yet, however.
Toshio Nakano, president of Ford-Tonichi, a Nissan affiliate that switched to handling Fords, for example, was quoted by Kyodo News Agency as saying that his dealership had suffered losses every month since dropping Nissans in favor of Fords in May, 1994. He told the news agency that he had asked Ford to compensate his company for part of the losses.
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Trade officials begin last-ditch efforts to settle dispute. A1
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A Tough Sell
Major reasons that American cars don’t sell well in Japan, as cited by Japanese auto executives:
* Not enough U.S.-made models are available with right-side steering wheels, the standard in Japan.
* U.S. cars are too big for narrow Japanese roads and small garages.
* American auto makers don’t have enough of their own showrooms in Japan.
* U.S. auto makers usually don’t match the new car guarantees that Japanese manufacturers offer.
JAPAN’S AUTO MARKET
1994 market share by place of origin: Japan: 95.4% Europe: 2.5% U.S. Japanese transplants*: 0.9% U.S. Big Three: 0.7% Other: 0.5%
* Japanese cars manufactured in the United States.
WHO SELLS THE MOST
Hondas top the list of cars imported to Japan from the United States. 1994 sales in Japan: Honda*: 47,296 General Motors: 18,655 Chrysler: 14,101 Ford: 12,398 Toyota*: 9,918 Nissan*: 78 Other: 25
* Made in the United States
Sources: American Automobile Manufacturers Assn. Researched by JENNIFER OLDHAM / Los Angeles Times
