Japanese drivers spooked by the recent Toyota and Prius recalls might consider another vehicle certified as “ecologically friendly” under Japan’s expanded cash-for-clunkers program: the Hummer H3.
Starting this week, Japanese buyers of the hulking power machines from General Motors — which come with a 5.3-liter, 300 horsepower engine and roar to 60 miles per hour in eight seconds — receive a 250,000 yen ($2,780) subsidy under Japan’s new, looser fuel-efficiency standards for imported cars.
By cutting slack for imported vehicles, Tokyo is responding to criticism, particularly from Detroit automakers, that recent tax breaks and subsidies designed to spur sales of fuel-efficient cars in Japan have unfairly excluded foreign brands.
No U.S. cars were eligible under Japan’s original program, which began last year, while nine out of ten Japanese-made vehicles received some form of tax break or subsidy.
Japanese officials had said Japan-made cars were simply cleaner. American automakers argued, however, that Japan’s unique fuel efficiency standards — which focus more on pollution at low speeds and in stop-and-go situations — put foreign brands at a disadvantage.
Adding to Detroit’s ire, Japanese brands accounted for almost half of sales under the United States’ own cash for clunkers program, in which models like the Toyota Corolla and Honda Civic topped the list. The scheme, which ended in August, offered consumers discounts of as much as $4,500 to trade in older vehicles for new, more fuel-efficient models.
General Motors, Ford and Chrysler had raised the discrepancy with the U.S. government, prompting the Obama administration to warn Japan in December that “changes were necessary” to give U.S. cars “greater opportunity to qualify under Japan’s program.”
Now, Japan says imported cars are welcome. To be eligible, buyers of foreign brands must also scrap a car more than 13 years old.
The Hummer H3 makes the cut, Japan’s Trade Ministry says, because the government has set easier fuel efficiency standards for heavier cars. The H3, which weighs about 4,700 pounds and averages 16 miles per gallon in city traffic, clears the required emissions standards relative to its weight, according to the Transport Ministry.
The Japanese government has also agreed to accept U.S. mileage standards instead of Japan-specific measurements — albeit for models with sales of less than 2,000 units a year here — making it easier for imported cars to qualify.
“The thinking is that with just one fuel-efficiency level, we’d only subsidize the smallest cars,” said Yasushi Akahoshi, Director of the Trade Ministry’s Americas Division. “But consumer needs are more diverse than that. Some people prefer smaller cars, but others need larger cars for work, for example, and they shouldn’t be penalized,” Mr. Akahoshi said.
“There was no debate over whether we like the Hummer or not. Under our new program, it simply qualified,” he said. “Our hope is that automakers make vehicles fuel-efficient, each according to its weight.”
Other foreign models also newly eligible for the 250,000 yen subsidy are Chrysler’s Voyager minivan, the Cadillac CTS luxury sports sedan and Ford’s Escape XLT Limited SUV.
The Mercedes Benz S-Class Hybrid and Volkswagen Golf TSI Comfortline clear extra fuel-efficiency hurdles and are also eligible for additional tax breaks.
Hans Tempel, head of the Japan Automobile Importers Association and chief executive of Mercedes-Benz Japan, welcomed the move.
“I think we’ve made a step forward,” he told reporters last month, when the government first announced it would loosen restrictions. “We appreciate that the Japanese government, after listening to our arguments, amended regulations,” he said.
Japan imports far fewer cars than it exports. Foreign automakers sold about 177,000 in Japan last fiscal year, a mere fraction of the 4.7 million cars sold in Japan and the 5.6 million cars the country exported. Moreover, Japan’s domestic auto market is in decline, hurt by a stagnant economy and aging population.
That has meant most American and European carmakers have been bypassing Japan for fast-growing auto markets like China and India. Not a single foreign automaker was present at the Tokyo Motor Show in October last year.
Despite being too wide for many of Japan’s narrow roads, sales of the Hummer, which have a cult following here, have been resilient. In the year to March 2009, GM sold 723 Hummers in Japan, an increase of 7.7 percent over the previous year despite an overall fall in car sales. GM has said it wants to boost Hummer sales in Japan.
General Motors sold the Hummer brand to the little-known Chinese machinery maker Sichuan Tengzhong Heavy Industrial Machinery last year. The sale is still awaiting regulatory approval in China.