Hummer don’t hurt them: Are Japanese consumers allergic to big cars?
This fall, General Motors plans to start selling a “small car” called the Aveo in Japan. Though the company only expects to sell a few hundred, its purpose is to make the Aveo a “feeder model” that will prepare Japanese consumers for more upmarket models down the line. It will be interesting to see the reaction, since American car companies have never been very successful selling large numbers of cars in Japan.
Apparently, GM is thinking along the lines of fighting fire with fire. Small Japanese cars have sold like hotcakes in the U.S. ever since they were first imported there in the early 1970s, so it follows that Japanese prefer small cars, and GM will give them what they want. But the major appeal of import cars in Japan is based on image, so GM’s competition is not Toyota-Nissan-Honda, but rather Mercedes-Volkswagen-Audi.
A Japanese person who wants to buy a small car is not going to buy one from GM, because the average Japanese doesn’t equate GM with small cars. If GM actually wants to compete in a realistic way then they have to compete with something that’s quantifiable, like gas mileage, regardless of the size of the car.
In that realm, America still lags. The Wall Street Journal reports that all cars sold in America will have to get at least 24 kilometers per liter . . . by 2025. Right now the American standard is about half that. Of course, gas mileage has always been the Japanese strong point, regardless of the price of gasoline. This situation was the basis of a bizarre news item last year. In February 2010, after the government had started offering rebates for so-called “eco cars,” ostensibly to promote conservation but mainly to prop up the domestic auto industry, the Ministry of Economy, Trade and Industry added 15 foreign models — mostly American — to the list of cars eligible for eco car rebates, and one of them was the Hummer H3-V8, the huge gas-guzzling military transport vehicle made famous by Desert Storm and Arnold Schwarzenegger.
Understandably, a lot of people were perplexed: How on earth did the Hummer qualify as an eco car? The explanation was that the Hummer’s gas mileage had “improved” a great deal. Given that the mileage was found to be 5.7 km/liter, it must have been pretty bad in the past. Most likely, METI added the Hummer to the list in yet another attempt to placate American trade negotiators who still couldn’t understand why Japanese people weren’t buying more American cars.
The Hummer may seem as if it’s beyond the pale (¥8.5 million new; about ¥3 million used), but the fact that there are Japanese companies that import it proves that there is a demand for the vehicle. Again, the general feeling that American cars don’t sell in Japan is due to the attendant belief that all American cars are big, but that’s also the appeal to certain consumers, and, in fact, bigness may not be as much of an economic problem as it used to be.
Take parking, for instance. Tokyo, one of the most expensive cities in the world to live in, actually has reasonable parking rates compared to other capitals. In a 2009 survey, a real estate research company named Colliers found that the most expensive city in the world for parking was London (US$1,020 a month), followed by Amsterdam ($805), Hong Kong ($748), Sydney ($733) and New York ($550). Tokyo was next at $525, just ahead of Zurich ($515). Of course, you’d have to be crazy, or crazy rich, to keep a Hummer in Tokyo, and for sure there are certain roads in Japan where you just can’t drive one, but if GM really wants to sell cars in Japan, they have to show a little more imagination.