Japanese cash for clunkers program draws criticism

12/10/2009, 4:24 PMBY MARK KLEIS

Detroit’s Big Three automakers are voicing concern over Japan’s version of the cash for clunkers program, which declares virtually all imported vehicles ineligible for government rebates. The Big Three have taken their concerns to the U.S. Government in a call for action.

Japan has recently launched its own version of the cash for clunkers program in an effort to spur its economy and shore up struggling new cars sales which are down 34.7 percent from their peak. However, unlike the American cash for clunkers initiative, Japan’s program specifically outlaws the eligibility of imported vehicles from the program.

In a letter jointly written by Ford, General Motors and Chrysler to the deputy U.S. Trade Representative, the automakers called the Japanese program “another example of Japan continuing efforts to discriminate against imported vehicles.”

The letter also said, “We urge the U.S. government to make clear that it cannot tolerate this outright discrimination, particularly at a time when it has provided substantial direct financial support for Japanese automakers in this market.”

By contrast, the American cash for clunkers program held no restrictions on imported vehicles and netted 319,300 sales for Japanese automakers – nearly half of the total 690,114 sales generated from the program.

Although the Detroit automakers are pushing the U.S. Government to urge Japan to consider more equitable terms, the potential sales for American automakers in the Japanese program are considerably less than what the Japanese automakers were able to obtain in the U.S. program.

American-made autos imported to Japan account for less than five percent of total sales each year.

Japan is offering a $2,830 tax cut for vehicles 13 years or older towards the purchase of a new fuel-efficient vehicle, and $1,130 for those who purchase a qualifying fuel-efficient vehicle without scrapping an older vehicle. The program is capped at approximately $3.7 billion in potential rebate funding.

Detroit's Big Three automakers are voicing concern over Japan's version of the cash for clunkers program, which declares virtually all imported vehicles ineligible for government rebates.

This'll end up in Politic real fast.

Oh globalism humpers... where are you? What was that about free trade again? Remember the uproar over the mere suggestion that we consider limiting the U.S. C4C to purchases of domestic branded vehicles? Japan and Korea had the WTO on speed dial in about 1/2 a second.

Political section post started...

Should be interesting to see how it turns out.

This should make national news and all the so-called Anal-ysts from left, right, middle, up or down should talk about this. There is NO gray area in this.

Guys, protectionism creates poverty in the country in which it is instituted. How does responding to Japanese protectionism by making ourselves worse off help anything?

Japan is one of the few countries where protectionism may work.

CSpec - >>"Guys, protectionism creates poverty in the country in which it is instituted."<<

Theoretically possible, but not in reality in this case.

>>"How does responding to Japanese protectionism by making ourselves worse off help anything?"<<

Responding by calling for the discontinuance of the protectionism in this case will --as alluded to by your first statement-- 'make us better off'.

Japan is one of the few countries where protectionism may work.

Really? I think the fact that their economy has been deteriorating for 15 years might say otherwise.

CSpec - >>"Guys, protectionism creates poverty in the country in which it is instituted."<<

Theoretically possible, but not in reality in this case.

You have it backwards--it's theoretically possible for protectionism to increase domestic welfare, but it's basically never happened.

Really? I think the fact that their economy has been deteriorating for 15 years might say otherwise.

Japanese culture is becoming inbred and looking back in on itself...it's not just an economic problem, its a cultural problem as well IMHO.

Chris

For the record, their Cash for Clunkers program has a minimum MPG requirement, and no Big Three vehicles meet it. It's not about country of origin.

Most American-branded vehicles sold there are exotics like the Camaro, HUMMER, etc.

>>"You have it backwards--it's theoretically possible for protectionism to increase domestic welfare, but it's basically never happened."<<

Within the prism of the US auto industry, compare back when there was almost no foreign competitors present (less than 5%), and the state of the marketplace was effectively the same as protectionism, to today's wide open, unlicensed market over the last 30 years.

The more pieces you slice a pie into, the smaller each piece is. For some, too small a piece is not worth dishing up.

Edited December 12, 200916 yr by balthazar

>>"You have it backwards--it's theoretically possible for protectionism to increase domestic welfare, but it's basically never happened."<<

Within the prism of the US auto industry, compare back when there was almost no foreign competitors present (less than 5%), and the state of the marketplace was effectively the same as protectionism, to today's wide open, unlicensed market over the last 30 years.

The more pieces you slice a pie into, the smaller each piece is. For some, too small a piece is not worth dishing up.

What's your point? Are you arguing that foreign competition in the auto industry was a bad thing?

Depends on the foreign competition. I don't like how we are being flooded with Crap Boxes like everything from Kia and Suzuki, for example.

Chris

What's your point? Are you arguing that foreign competition in the auto industry was a bad thing?

Who is wealthier for it? Certainly no one in the U.S.

Toyota workers earn less than their domestic counterparts.

The auto execs would have to get by with being only 40 times as wealthy as the blue collar workers instead of 400 times as wealthy.

I certainly don't mind competition...it's hard to imagine a car like the fusion Hybrid being built without the Prius being sold for exaple. And there are lots of foreign sports cars, from Vintage British stuff to modern Porsche's...that I'm glad are sold here.

Again, hard to imagine the Z06 without competition from Porsche Ferrari, et al.

But we need to bring balance to our nation, and jobs back to out nation. So I would agree with some sort of protectionist sentiment. Just not sure how/what would be the best way to go about it.

Chris

This budding media war against Asian vehicles is a start. It's what brought down the domestics over time, it can work against the Asians, too, I sincerely hope. Please spread the word about every NHTSA investigation of Toyota you can, and every outrageous example of Japanese protectionism, as evidenced here. Let the people know... make it stick.

Who is wealthier for it? Certainly no one in the U.S.

Toyota workers earn less than their domestic counterparts.

The auto execs would have to get by with being only 40 times as wealthy as the blue collar workers instead of 400 times as wealthy.

Maybe you should move to North Korea? They seem to have the kind of economy you think is equitable.