When Japanese
Prime Minister Shinzo Abe meets on Friday with U.S. President Donald Trump,
Japan's bulging automotive trade surplus will be a sore spot, but the
path to balancing auto exports and imports will be no easier than it was in the 1980s.
path to balancing auto exports and imports will be no easier than it was in the 1980s.
Trump may
press Abe to do more to level the trade imbalance with Japan during a White
House visit or a round of golf, but the two leaders are unlikely to change the
fact that the big cars and trucks that America makes do not sell in Japan.
Many
Japanese consumers, faced with congested cities, favor tiny domestically-made
vehicles, called kei cars, which make up more than a third of the market.
Priced from around 1.1 million yen, or about $9,800, these cars have engines
most Americans would consider inadequate for a motorcycle.
Even Japan's
Toyota Motor Corp (7201.T) and Honda Motor Co (7267.T) cannot convince Japanese
consumers to buy models that are popular in the United States. Small sport
utility vehicles such as the Toyota RAV4 and Honda's CR-V are seen by Japanese
consumers as too big.
Only about
13,000 vehicles from U.S. automakers sold in Japan in both 2016 and 2015, and
of that about three-fourths were Jeep SUVs made by Fiat Chrysler Automobiles
(FCHA.MI) (FCAU.N). Ford Motor Co (F.N) announced last month that it is pulling
out of the Japanese market entirely, after selling just 2,400 vehicles there in
2016.
The Japanese
auto market has shrunk not only in terms of vehicle size, but in sales volume.
As a result, global automakers, including Japan's, are focused on boosting
sales in China, the United States and growing emerging markets.
"It
would take a painstaking fine-tuning of vehicle specs to suit American cars to
those driving and other conditions and develop a strong distribution network to
be able to gain traction in Japan. It is nothing short of a 20-year
effort," said a Toyota executive who spoke on condition he not be named.
Jaguar Land
Rover Japan Ltd Chief Executive Magnus Hansson said the low sales of U.S. cars
in Japan did not mean it was a closed market, but rather reflected "a
total and absolute lack of effort over 50 years" by Detroit.
Still, Japan
remains an export hub for the big Japanese automakers. The U.S. Commerce
Department this week reported that the U.S. trade deficit with Japan in 2016
was $68.9 billion, and of that total surplus, some $52.6 billion was in
vehicles and automotive parts.
Japan's
automakers have more than 90 percent of the Japanese market. Last year U.S.
automakers controlled only 45 percent of their home market, the world's second-biggest
after China.
A bigger
factor than imports in the Detroit automakers' loss of U.S. market share since
1980 is the surge in investment by Japan's automakers in U.S. factories. Last
year, 56 percent of the vehicles Toyota sold in the United States were made in
America, the company said. Toyota said it employs more than 34,000 in the
United States.
For years
the growth of Japanese-owned auto factories in the U.S. heartland has helped
cool trade tensions.
But Trump, a
Republican, has turned up the heat by complaining about the trade surplus and
accusing Japan of manipulating the value of the yen to disadvantage
American-made goods.
On Thursday,
a bipartisan group of senators from auto manufacturing states called on the new
president "to address currency manipulation and auto-related non-tariff
barriers.”
They are not
alone in urging changes to help bolster U.S. business.
"(Trump)
must bring Abe up short on any cheery notion that business will continue as
usual," said Kevin L. Kearns, head of the U.S. Business and Industry
Council.
The group
represents smaller U.S. manufacturers, many of which feed the U.S. auto
industry.
REUTERS
0 Comments