Japanese cash for clunkers program draws criticism

Detroit's Big Three automakers are voicing concern over Japan's version of the cash for clunkers program, which declares virtually all imported vehicles ineligible for government rebates. The Big Three have taken their concerns to the U.S. Government in a call for action.



Japan has recently launched its own version of the cash for clunkers program in an effort to spur its economy and shore up struggling new cars sales which are down 34.7 percent from their peak. However, unlike the American cash for clunkers initiative, Japan's program specifically outlaws the eligibility of imported vehicles from the program.

In a letter jointly written by Ford, General Motors and Chrysler to the deputy U.S. Trade Representative, the automakers called the Japanese program "another example of Japan continuing efforts to discriminate against imported vehicles."

The letter also said, "We urge the U.S. government to make clear that it cannot tolerate this outright discrimination, particularly at a time when it has provided substantial direct financial support for Japanese automakers in this market."

By contrast, the American cash for clunkers program held no restrictions on imported vehicles and netted 319,300 sales for Japanese automakers - nearly half of the total 690,114 sales generated from the program.

Although the Detroit automakers are pushing the U.S. Government to urge Japan to consider more equitable terms, the potential sales for American automakers in the Japanese program are considerably less than what the Japanese automakers were able to obtain in the U.S. program.

American-made autos imported to Japan account for less than five percent of total sales each year.

Japan is offering a $2,830 tax cut for vehicles 13 years or older towards the purchase of a new fuel-efficient vehicle, and $1,130 for those who purchase a qualifying fuel-efficient vehicle without scrapping an older vehicle. The program is capped at approximately $3.7 billion in potential rebate funding.