Toyota, Honda, Nissan, Mazda, Suzuki … We still have some car brands to add to this list. They’re all Japanese brands.
The automotive industry in Japan is one of the most prominent and largest industries in the world.
Over the past 50 years or so, Japanese cars have become extremely popular in the United States. Reliable, fuel-efficient vehicles like the Toyota Prius and Honda Civic have maintained their popularity over time, and sales of these vehicles don’t appear to be slowing down anytime soon.
The case with American cars in Japan, however, is different. As it turns out, the scenario is practically the opposite—American automobiles don’t sell well in Japan.
About 90% of the domestic auto market in Japan is dominated by Japanese brands. In comparison, domestic brands in the United States hold a far lower market share. The Big Three—General Motors, Ford, and Fiat Chrysler—represent 45% of the market, while Japanese manufacturers account for 39%.
When it comes to sales of American vehicles in Japan. Last year, Ford left Japan, where it had only sold 5,000 vehicles a year. There are only 28 GM dealerships in Japan, where they sold roughly 1,000 vehicles in 2016.
So why are Japanese cars doing so well but American cars aren’t? what’s the cause of this imbalance? Some critics say the issue is that Japan overprotects its markets, making it impossible for manufacturers from other nations to compete. President Donald Trump also criticized the imbalance when he traveled to Japan.
But When it comes to tariffs, Japanese businesses must pay them to import automobiles into the U.S., but the Japanese government is kind enough not to impose them on American companies that import automobiles into Japan.
As you can probably guess, there’s a lot more going on behind the scenes. So let’s understand why American cars fail in the land of the rising sun.
Reasons why American Car Failed In Japan
Lack of dealership networks
American automakers have struggled to establish dealership networks in Japan, making it difficult for consumers to find and purchase their products.
In Japan, purchasing an automobile is often done in a very different way than in the United States.
While Americans visit the dealership to pick their vehicle, Japanese buyers prefer to customize their unique vehicle.
Additionally, Japanese auto dealerships offer superior customer service free maintenance is often included, picking up from and delivering back to the customer’s home, and unique amenities like coffee shops.
Again Dealers hang out with customers and regularly wash their cars while chatting about anything and everything.
In essence, Japanese retailers build real relationships with their clients as opposed to some American retailers who only see them as dollar (or yen) symbols. This makes it considerably harder for American brands to adapt to the Japanese auto market.
This is the main reason why American automobiles haven’t sold well in Japan, rather than trade deals or manufacturing quality. It’s the dealers, not the automobiles.
The high level of service that Japanese customers have come to expect requires a large investment from the dealer, which American brands have reportedly been unwilling to make.
Different Market Preferences
American companies make a variety of vehicles, from sedans to pickup trucks; however, Japanese consumers are solely interested in smaller, more compact cars.
Americans tend to make much larger vehicles that wouldn’t fit well on narrow and crowded Japanese roads.
This is why “Kei cars,” a type of minicar, have been so popular in Japan over time. Just imagine a Kei vehicle as a much more compact Mini Cooper which is compact enough to easily fit into a carpark, yet safe enough to be run on highways.
As opposed to this, many of the Japanese vehicles sold in America — from sedans such as the Toyota Camry up to pickups — are not even particularly popular in Japan.
Other factors such as Quality issues: American cars often had reliability and durability issues, which did not appeal to Japanese consumers who value high-quality products.
Brand image: Japanese consumers generally had a negative perception of American cars due to their association with low-quality and poor reliability.
And Strong competition: Japanese car manufacturers, such as Toyota and Honda, had already established a strong foothold in the Japanese market, making it difficult for American brands to break in.
Is it impossible for a non-Japanese manufacturer to be successful in Japan?
Success in Japan is not impossible for a non-Japanese car manufacturer.
BMW has spent 580 million Euros upgrading its dealer network in Japan to better meet Japanese expectations.
The brand-new dealership, which is 27,000 square meters in size, is situated in Tokyo Bay close to a future Olympic park. When you enter the dealership, you’ll see a separate Nescafé coffee shop where anybody, not just those interested in automobiles, is welcome to sit down at the many tables and order specialty coffee beverages and sweets from servers.
In a sizable showroom, there are stylish automobiles and bicycles, and in a different showroom, you can buy BMW souvenirs and automotive accessories. On the weekends, the company hosts activities where kids are invited to play with remote-control cars on a track.
“In Japan, everything is about hospitality,” Peter Kronschnabl, the CEO of BMW Group Japan and the chairperson of the European Business Council’s Automotive Committee and the Japan Automobile Importers Association, told. “If you are not into this, it will be very difficult to succeed in the Japanese market.”
In Conclusion
We can see that rather than adapt to Japanese ways, American manufacturers have either lowered their expectations. Still, Japan is the third largest auto market in the world behind the U.S. and China. It may take a bit of investment and a change of mindset to break into this market, but BMW has shown that it can be done.
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