Why US Car Makers Are Unable to Get a Break In Japan?

BMW CAR

Japanese leading brands are responsible for 90 % of the local car market and that is largely due to the amazing ties between the customers and dealers. So an insight revealed that customers tend to have deeper relationship with dealers in Japan than those living in the West.

As per the Atlantic, any Japanese dealer will build the customer relationship early on when the customer is only seeking to purchase a car. They do so by offering the demo cars to get the feel of the actual car, offer the free car washes – no matter if they actually make the purchase, take care of insurance matters for them and so on.

Simply staying in touch with their clients get them a special place in the hearts and minds of the customers. This is the hospitality in which Japanese society largely revolves around and that is why the Japanese automobile manufacturers remain active in the region as opposed to their US counterparts because American dealers are not able to provide such level of service to Japanese.

BMW CAR makers

Back in the US there are American made automobiles which are popular, however, it is only a smaller share of the market. These manufacturers are GM, Ford, and FCA and accounts for a total 45 %. Japanese automobile makers, on the other hand, makes up 39 % of market share. This has led to a trade imbalance between US and Japan.

Even Donald Trump has gone on record to say that Japanese make it impossible for the US to sell cars there. So are the Americans who use the same logic to define limitation that regulations governing car sale are not friendly for others in Japan as they call for lengthy inspections of foreign manufacturers’ vehicles and thus, dealers are unable to sell any foreign-made car.

But there is another side to the story and not just protectionist policies by Japan. Import tariff is what distinguishes the two. You will note that there is zero tariffs on cars when buying cars from Japan but no such favors are provided when customers buy form US or EU for that matter which impose 2.5 % and 10 % tariffs, respectively.

Also, the large part of problem lies in American car dealers refraining from investing in the dealer network which Japan car dealers have. That is why, primarily, people prefer Japanese automobiles over foreign-made cars. Had the Americans invested in the dealer network, they could have easily broken into that market.

new BMW CAR

According to one study, Ford pulled out of Japan because it only sold 5000 units in a year and at the same GM had 28 dealerships in Japan but still managed to sell only 1000 units in 2016. These are startling stats to be honest. These names are not new entrants or players rather are world renowned brands.

The edge Japanese dealerships have is that they provide customers with free maintenance, pick up their export cars from Japan for routine tuning and returning them at their doorstep adds to the trust and reliance of Japanese people in Japan based automobiles. It is expensive to go an extra miles but for the sake of customers the dealer network in Japan are willing walk that extra mile.

That is not to say every foreign-made car has faced a similar fate in Japan instead imports from EU has witnessed a surge in the years 2013 to 2016 of over 5 % in cars which amounts to a total of 251,115 imports. If you compare it with US imports, you will notice a sharp decline in imports for the same period.

BMW Concept

In Japan it is not about marketing the product but about hospitality. BMW is a classic example. Some three years back doubled their efforts in the Japan region and in the process spent $675 million for expanding its dealer network. It was the words of CEO of BMW that if you are to capture the Japanese market you have to be able to reign supreme in the hospitality department or you won’t be able to succeed.

The imports for US, as stated previously, plummeted by 15 % and the amount of cars imported were a mere 19,933 as opposed to EU. Mercedes and BMW followed the hospitality route and saw their sales grow by 60 % and 23 % respectively between the years 2012 and 2016.

About Author : Ivan Martinez is an automobile geek who loves to write and drive cars a lot. He is not only carrying his passion for writing and providing writing services but also proving his love for cars by assisting people in export used cars from Japan companies by using all his experiences of writing and meeting with people from same industry.