Japan Allows American Cars in Their Cash for Clunkers Program

By Brendan Moore

01.19.2010

Japanese flagIn what will be a largely symbolic gesture as opposed to a change that produces big sales numbers, the Japanese government has decided to allow imported American cars to be eligible for their version of a cash-for-clunkers stimulus program.

The previous exclusion from the program was based on the fact that the imported American cars were not required to be tested under Japan’s government fuel economy standards as a result of being sold under a special waiver provision, and therefore had no official government fuel economy rating that could be used to qualify for the cash for clunkers program.

There are only around 2000 American vehicles imported to Japan every year, and of that 2000, it is believed that only about 40% of those meet Japan’s tough new fuel economy standards for 2010, which is a requirement for eligibility for Japan’s cash for clunkers initiative.

Still, Japan’s exclusion of Detroit’s models sparked outrage in Congress, where the issue made a good sound bite, if nothing else. The Japanese makes did very well in the cash for clunkers program in the US, selling almost half of all the new cars purchased under the plan. Japanese vehicles notched 319,342 sales out of an approximate 677,000 vehicles purchased.

The American cash for clunkers program, as originally proposed way back when, would have limited eligible new vehicles to domestic makes only. That provision was amended hurriedly after overseas automakers and their retail dealers, and, free trade advocates in the political spectrum, protested vigorously.

Sen. Debbie Stabenow, D-Michigan, introduced a bill earlier this month that would have required that Japan’s cash for clunkers program be opened up to American imports, and would have also required the US trade representative to file a lawsuit with the WTO (World Trade Organization) if Japan did not accede to American demands.

The inclusion of American vehicles is expected to result in around an extra 700 Detroit 3 vehicles sold in Japan under their program.

Under Japan’s cash for clunkers stimulus program, buyers who trade in a 13-year-old vehicle for any new one that meets or exceeds the country’s aforementioned tough 2010 fuel economy standards can get a tax credit of up to 250,000 yen, or about $2,800 USD.

Buyers of new vehicles that don’t have a trade-in get a smaller tax credit of up to 100,000 yen, or $1,132, for models that meet or exceed the 2010 fuel standards.

COPYRIGHT Autosavant – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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7 Comments

  1. What a decisive victory for our American lawmakers!

    The Japanese get 319,342 vehicle sales out of it, and we get 700. Guess we showed them!

    Yessir, you just don’t mess with the United States Congress!

  2. I’m not sure whether to laugh or cry at this.

  3. I don’t think there is anyone better than the Japanese at proclaiming they have open markets while simultaneously snuffing out foreign competition through numerous and byzantine rules and regulations.

  4. I’d be very surprised if there’s even a significant number of 13 year old cars of any make or nationality in Japan. The registration laws are such that it often isn’t worth having a older car because they are ‘penalised’ for being old.

    This explains why most 13 yr old JDM cars are these days found in New Zealand….and to a lesser extent, Australia, as so called grey market imports.

    Oh yes…..and big ups for Michigan lawmakers for such an important and substantial contribution to ‘keeping it real’.

  5. You can’t make this stuff up. It’s just too crazy.

    It’s like a bad sitcom.

  6. Boy, that’s special. The Japanese throw us a bone (make that a small dried liver treat) of 700 cars and there are congratualtions all around in our nation’s capital. Pathetic.

  7. There are two major conditions which vary between the US and Japan which have resulted in the Japanese restrictions on import of USDM cars into Japan.

    1) USDM models being configured primarily for Left-Hand Drive, whereas the Japanese models which end up being exported are configured for both (at greater expense to the Japanese manufacturers).

    For the few USDM that are converted to RHD the cost often is a barrier to sales. A RHD Cadillac CTS bases for $53K in the UK which is 60% more expensive than in the US.

    2) Whereas American freeway lanes follow a standard of 12 feet in width many older Japanese expressways are nearly 1.5 feet narrower.

    Narrower road lanes combined with cramped urban parking in Tokyo, a city with 13 million inhabitants. Most Tokyo parking lots require elevator style lifts to accommodate all the cars.

    Therefore there is a 66.9″ width restriction beyond which registration tax is imposed. While a Honda Fit is under the width limit, of USDM cars not even a Chevy Cobalt or Dodge Caliber meet that requirement.

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