American car manufacturers historically have had a hard time selling cars in Japan. Most people believe this is due to trade policy and tariffs. And while that is partially true, the complete answer involves several other factors. In this article, we will look at the most important of these.
First, there are sales restrictions
There are uniquely Japanese laws that affect American car sales. Perhaps the most significant is that there is a law that prevents existing domestic car dealers from selling foreign cars. That’s right, existing dealers can’t sell foreign cars! This obviously is a huge issue because it makes it necessary for any manufacturer that wants to penetrate Japan to build a dealer network. For obvious reasons, this puts a damper on the efforts of foreign manufacturers because of the large capital investment involved.
Strong relationships among the Japanese
In addition, Japan’s automoble sales model is different than that of the rest of the world. In Japan, car dealers build very strong relationships with their customers. It might be similar to the relationship you and I have with a local merchant, a merchant that you genuinely enjoy seeing and doing business with.
For example, after a car purchase, the dealer nutures the relationship relationship by staying in touch with the customer. This may be by offering free car washes, promotional products and even informal meals, back at the dealership. Japanese dealers work hard to win a customer’s loyality and they work even harder to keep it. The car dealer and staff get to know not only the customer but their immediate family and extended family too.
There are also some historical reasons that make it hard for U.S. automakers to sell cars in Japan. It has to do with the way that Japanese citizens view other car manufacturers. Our automotive historian at Warren Henry Automotive, a Miami-based multi-make car dealer explained that after World War II, all the foreign car manufacturers were forced to leave Japan. As the Japanese economy strengthened, the domestic brands competed with each other and, as a result, grew better and better in terms of quality and design. By the time Japan opened its market in the 1970s to other makes, the Japanese people were accustomed to buying only domestic cars, and they had become very well engineered.
Its all too easy to state that the reason more American cars aren’t bought by the Japanese is due to simple trade policy and tariffs. After analysis, it turns out that the situation is more complex as we learned above.