Gray-market U.S. vans big in Japan

June 25, 1994|By Thomas Easton | Thomas Easton,Tokyo Bureau of The Sun

TOKYO -- Time to reconsider the chronic complaint by U.S. carmakers that the Japanese make sales of Big Three cars impossible. In some cases, it's the U.S. manufacturer that's getting in the way.

A burgeoning underground has quietly developed in Japan with dealers and brokers who directly import vehicles from outlets in the United States and resell them here, often for far lower prices than the conventional distributors charge.

Statistics on the market share of these dealers don't exist, but the Japan Automobile Dealers Association estimates there are 530 unofficial outlets of U.S. cars, up from just 85 in 1988, strong evidence of Japanese demand.

"They are capitalizing on a part of the market that is not served by the domestic manufacturers or the importers," said Michael Durrie, President of GM Japan Ltd., who recently spent a weekend touring some of the lots in Tokyo where the vans are sold. "It is an interesting phenomenon. It says there is more demand than we are meeting with new vehicles."

The gray marketers have drawn little support from the industry. General Motors, the favored make of many of the underground dealers because of the phenomenal mark-up charged on its exported cars, has taken strong steps to block their access to vehicles.

"If they released more cars to the gray market, they could sell a lot more than they do," said Hyogo Kamada, a car broker. "I'm sure of that."

Consider the case of the GM van assembled in Baltimore. The vehicle is cherished by a small but emphatic group of enthusiasts.

"Why did I buy a GMC?" says Masahito Morikubo, as he clamors over the leather seats of his newly transformed van to switch on miniature track lighting and a two-set, satellite-TV-video system. Because I love America. The Japanese car, it is not wild."

Indeed, Mr. Morikubo owns a half-dozen austere Suzuki vans for his business, but that's just for transportation. For his own use, Mr. Morikubo wants a whimsy machine that he can picture cruising the endless American highways. Over the lid to the gas tank, he's pasted a sticker from U.S. oil companies that don't even have outlets in Japan, and the front license plate carries the Chevy slogan, "Heartbeat of America." Inside, attached to the -- near the navigation system (brand not visible, but it's a Sony) is an English calendar of bikini-clad women, supplied by Snap-On, the U.S. tool company.

"Young guys like me, we want it just like in the States," he says.

Except when it comes to how they buy it.

GM has said it sold about 1,000 vans last year through its own Japanese distribution network. First-time registrations suggest several times that many may have been brought into the country through unofficial outlets.

Why? GM brings in the wrong model, then sells it at the wrong price.

In the United States, basic vans sell for $17,000 to $22,000. By the time a relatively bare model arrives at an outlet of GM's longtime distributor Yanase & Co., the sticker is $47,000. A plusher version is sold through dealers connected with Mitsui & Co., a major trading company, for $55,000 and up, far in excess of the borrowing limit of the generally young buyers the vans attract.

For that money, GM customers are treated to some of the most splendid showrooms in Japan. The fixtures are smoke glass, chrome and wrought iron; repairmen in designer jumpsuits work in adjacent garages; mood music hums in the background.

The unofficial outlets are more austere, just concrete floors crowded with vehicles. Only the prices sing. For comparable models, gray marketers charge as much as one-third less than GM's designated dealers. Used vans, elaborately refinished down to the repainting of the seat grooves, can be had for the comparatively cheap price of $25,000.

And the lower sticker is just the beginning. The "wildness" that attracts buyers like Mr. Morikubo is a result of extensive re-fitting the unofficial dealers put into the vehicle before bringing it into Japan.

Essentially, the vans coming off the assembly line in Baltimore have no advantages over the numerous efficient vans produced in Japan. Moreover, like almost all U.S.-made cars, they have never been given the basic design modifications to make them suitable for Japan, where people drive on the left rather than the right.

Steering wheels are on the wrong side for the driver, which is a small problem, and the sliding doors are on the wrong side for the passengers, which is a huge problem. The Japanese are obsessed with curb-side access -- cab drivers have automatic doors on the left and occasionally just seal up the door on the right.

Typically, that flaw would be the end of the story. Instead, for a price just under what Yanase charges for a basic model, the unofficial dealers compensate for any shortcoming by providing

every conceivable option including, literally, the kitchen sink.

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