Trump Wants More U.S. Cars in Japan, What's Missing Are Buyers

(Bloomberg) -- In trying to improve American cars’ access to Japan, President Donald Trump may be overlooking the key obstacle: Japanese consumers don’t want them.

Of the 3.2 million vehicles sold this year in Japan, only 0.3 percent were American brands, according to data from Japan’s auto industry associations. In contrast, Japanese brands have a market share of about 40 percent in the U.S.

Trump announced Wednesday he had reached an agreement with Japanese Prime Minister Shinzo Abe to open trade talks between the two nations. The president had threatened a 25 percent tariff on cars, seeking to deter imports and encourage more production and jobs in America. Trump, who also wants better access for U.S. cars in Japan, agreed with Abe that sanctions on auto exports won’t be applied while the talks take place.

While the U.S. currently has a 2.5 percent import tariff on passenger cars and 25 percent on trucks, Japan removed its last levies on auto imports almost four decades ago. Japan has long argued the reason for low presence of U.S. cars has nothing to do with tariffs: Japanese consumers generally perceive U.S. cars as bulky and inefficient -- minicars and other locally made fuel-saving models dominate the country’s vehicle sales.

Only about 7 percent of Japan’s total car sales are imports, but some foreign brands are in demand. German manufacturers claimed the top five importer positions -- a point Japan uses to prove its consumers don’t shun all foreign marques. Daimler AG’s Mercedes-Benz sold 42,000 units this year through August, while BMW sold 30,500 units.

Fiat Chrysler Automobiles NV’s Jeep is the No. 1 American brand in Japan, selling more than 7,000 units in the first eight months this year, topping other U.S. marques combined. Ford Motor Co. said in 2016 it was pulling out of Japan, calling the country the most closed developed auto market in the world.

©2018 Bloomberg L.P.