Good News from Japan for GM

RisingSunofNihon ^ | June 12, 2006 | Dr. Bill Belew

[G. Stolyarov II]

Business Financial News reported Japanese dealers have cut the number of GM dealerships that handle GM cars.

The question is what took them so long - GM cars have never been popular in Japan. The reason is simple - they don't fit! The streets are too narrow, and American cars are too fat.

Yanase & Co. has about 26 dealerships of their 160 total that try to sell GM cars. The exact number that they will cut has not been determined.

GM, for its part, says it will stop selling Opel models in Japan - I think it's because those are the ones that will fit in the streets.

Instead, GM says it will continue to sell Cadillacs, Hummers and Corvettes.

My goodness, how stupid! No wonder GM is getting its butt kicked by Toyota.

What do you think?

[G. Stolyarov II]

This article sheds some light on why American car companies have a comparative advantage in larger vehicles, while Japanese car companies have a comparative advantage in smaller vehicles. There is simply no room on Japanese streets for larger vehicles to fit, so the Japanese car companies have no incentive to manufacture them. That said, it would probably be wiser for American companies to sell cars in Japan that meet the demands of Japanese consumers and their surroundings. See Dr. Belew's blog at RisingSunofNihon

[USNBandit]

The town house I rented west of Yokohama was served by a two way street which was narrower than the driveway in my American home.

If you met a car coming in the opposite direction you would try to meet them at an intersection or you would have to back up to the previous intersection. Regardless, it required being very polite and a lot of bowing back and forth.

[Yo-Yo]

The excuse why GM cars didn't sell in Japan use to be because GM wouldn't build right hand drive versions.

GM never had trouble selling Corvettes, Hummers, and Caddies in Japan. They import in limited quantities that are snapped up by the status conscientious Japanese Executives.

It's the low end of the market where GM's Opel can't compete, and that is mainly because of the Yen value floating all over the place.

The Dollar-Yen exchange rate volatility is why Toyota, Honda, Mazda, and European manufacturers BMW and Mercedes-Benz among others have built factories here in the US.