Toyota alone captured nearly 20% of the cars sold through the American Cash for Clunkers program, but Japanese lawmakers have excluded American vehicles from their own Clunkers program.
Like much of the developed world, Japan has been struggling to reverse an economic downturn that has hit hard its long-ailing auto industry. Sales will barely top 5 million, this year, off nearly half from the country’s one-time car sale peak.
But there have been some signs of life in the wake of recent government incentives, and Japanese auto industry leaders are particularly upbeat about their prospects in light of a new program similar to the federally-funded Cash for Clunkers campaign that sent demand soaring, in the U.S., over the summer.
There’s one big problem, foreign makers contend, citing what they call “outright discrimination.” The Japanese program is designed specifically to assist home market manufacturers, effectively locking out struggling importers who, for the most part, have long been able to crack the Japanese market.
The program is “another example of Japan continuing efforts to discriminate against imported vehicles,” argued a letter sent to the deputy U.S. trade representative by the Big Three Detroit manufacturers, adding that despite the measures focus on high-efficiency models, “the vast majority of imports (are) ineligible” regardless of their fuel efficiency.
The program provides up to $2,830 in tax breaks for vehicles at least 13 years old as long as the vehicle purchased meets Japan’s 2010 mileage standards. Even without a trade-in – and it’s rare for Japanese motorists to hold onto their cars that long – buyers can get a credit of $1,130.
The way the measure is written, 87% of Japanese-made vehicles qualify for the government incentives. Not a single U.S. vehicle qualifies, nor do other imports.
It took American lawmakers half a year to come up with an acceptable version of the Cash for Clunkers program, officially known as the Car Allowance Rebate System, or CARS. Early versions – drafted as General Motors and Chrysler were teetering towards bankruptcy – were designed to help drum up business for the struggling Detroit makers. But eventually, pressure from foreign makers, and from overseas governments, led lawmakers to open the final bill up to any new vehicle meeting certain basic requirements.
Foreign brands ultimately grabbed 319,000 of the 677,000 vehicles sold through the Clunkers program, Toyota picking up 19.5% of the sales, which were subsidized by the U.S. Treasury.
“USTR is continuing to raise this issue with the Japanese government. Our position remains that changes are necessary to give U.S. vehicles greater opportunity to qualify under Japan’s program,” said a spokeswoman for U.S. Trade Representatives office, responding to the Big Three claims of “outright discrimination.
Foreign makers, including European, Korean and American manufacturers, have long blistered over what they see as a closed Japanese market. Despite that government’s claim that there are no trade barriers, foreign makers have never been able to collectively grab more than a fifth of overall Japanese sales.
That led Hyundai to pull out of the Japanese market, this autumn, and most foreign makers abandoned the once-influential Tokyo Motor Show, this past October.