Japanese automakers are heading towards 40% of the US market share based on reporting by WSJ and Nikkei Asia Review. Given the information, it seems reasonable to ask why US automakers do not do so well in the Japanese market.
Alana Semuels, who does excellent reporting on business and society in the Atlantic Magazine, asks precisely that question: Why Aren’t U.S. Cars Popular in Japan?
It is not due to tariffs.
She finds that one possible reason is the high Quality of Service at Japanese dealerships which focus on Customer Lifetime Value (CLV) (providing services such as free servicing, pick up and return services, and individual attention, etc.) and the low investment of US Auto companies in dealership service networks in Japan. Note that this dealership structure is not scalable. Building a dealership network is very much like early customer acquisition. It is an extraordinarily slow process, very dependent on building individual relationships.
However, the world over, U.S. car brands and designs are considered authentic and iconic. Nevertheless, they don’t seem to sustain strong customer relationships through dealers. Why was it that customer relationship was never in focus for product differentiation for most US brands (except for luxury brands)?
Not long ago, there was a U.S. car brand that was focused on building such a customer-dealer relationship: Saturn.
Saturn was very popular with customers before GM reabsorbed and shut it down. In fact, in 2007, Saturn was the most popular car among women car buyers. Here is an interesting Knowledge@Wharton article on Saturn (featuring some comments from my colleagues Morris Cohen at Wharton and Hau Lee at Stanford, who worked on Saturn Supply Chain).
Saturn was a quirk while it lasted. Generally, American companies have pushed inventory down the supply chain. The dealers, bearing the brunt of inventory costs, thrived by offering expensive upgrade options, which were sustained through skillful hand in negotiations and bargaining power gathered from asymmetric information. Going to car dealers was something to be avoided. Saturn was an exception.
Reports are mixed on why the Saturn model died in the United States, but one could see it doing better in Japan.