Join U.S.-Japan price surveys shows auto parts cost much more in Japan

Business America, July 15, 1991

A joint U.S.-Japan automotive parts price survey shows prices in Japan are much higher than in this country-in many cases, 200 and 300 percent more.

Secretary of Commerce Robert Mosbacher commented, "The price differences borne out by this study paint a picture of a non-competitive auto parts market in Japan, one which imposes a burden on foreign manufacturers in their efforts to overcome impediments to market access. "

Mosbacher pointed out that the auto parts deficit accounted for one-quarter of the entire U.S. trade deficit with Japan in 1990. "In fact, 75 percent of that deficit is related to trade in automotive goods. If we are to reduce that deficit, we have to make inroads in the automotive sector," he said.

"We have world-class auto part manufacturers," the Secretary continued. "They desire the opportunity to compete toe-to-toe with the Japanese industry on a level playing field. Trade is a two-way street. "

The survey, conducted jointly by the U.S. Department of Commerce and the Japanese Ministry of International Trade and Industry (MITI) this spring as part of the Market-Oriented Cooperation Plan, found that prices of identical or comparable uninstalled parts averaged 340 percent more in Japan than in the United States. For installed parts, the prices were 198 percent more in Japan.

Both of these results were reached by using the lowest price in each country for each of 68 parts surveyed. Installed costs for two of the items were not available in Japan.

* Using the average price in each country for each item, the uninstalled parts are 87 percent more expensive in Japan and the cost of the installed parts is 31 percent more in Japan.

* Of the 68 uninstalled parts covered, 48 (71 percent) were more expensive in Japan; and 23 (35 percent) of the installed parts were more costly.

Based on the lowest price analysis, the price survey also found that for components alone:

* Japanese prices for parts surveyed for the Nissan Sunny were 119 percent higher than those for the Nissan Sentra in the United States. Sunny is the Japanese market name for the Sentra.

* Japanese prices for parts surveyed for the Toyota Corolla were 107 percent higher than these in the U.S.

* Japanese prices for parts surveyed for the Chevrolet Camaro exceeded U.S. prices by 453 percent.

* Japanese prices for parts surveyed for the Ford Taurus exceeded U.S. prices by 681 percent.

The study was conducted over two one-week periods in March and April in Tokyo, Osaka, New York, and Los Angeles.

In each city, prices for both uninstalled and installed parts for two Japanese automobiles (Nissan Sentra/ Sunny and Toyota Corolla) and two U.S. models (Chevrolet Camaro and Ford Taurus) were surveyed. The basic types of parts surveyed were engine (piston rings, water pump, thermostat, fuel pump, and fuel injectors), body muffler, exhaust pipe, upper radiator hose, wiper blade, and windshield), chassis/drive train (clutch disc, front coil spring, rear shock absorber or strut, constant velocity or universal joint, and master brake cylinder), electrical/electronic parts (battery, horn relay, fuse, ignition coil, and Halogen headlight or bulb).

Five types of distribution outlets were surveyed in the four locations, including dealerships, Ministry of Transport-licensed independent garages, jobbers, auto centers, and home centers in Japan; and dealerships, garages, jobbers, auto centers, and mass merchandisers in the United States.

The auto parts survey used the same methodology employed in the second joint price survey conducted under the U.S.-Japan Structural Impediments Initiative (SII) in April. In the Sll survey of 112 products of all types, overall prices were found to average 37 percent higher in Japan.

The auto parts price survey is an element of the Market-Oriented Cooperation Plan, created to resolve specific automotive parts issues between the United States and Japan and increase opportunities for U.S. auto parts suppliers.

Mosbacher called the Japanese consumer "another victim of these higher prices in a non-competitive market. " The Japanese consumer, he said, has a limited choice in the replacement parts market in Japan. The survey team found that, in some cases, only original equipment parts were available to the Japanese consumer. It also found that prices were almost identical at different outlets in both Tokyo and Osaka.

While some parts were found to be more expensive in the United States, the survey found that, for most parts, lower prices could be found in the independent outlets in the United States. In other words, Mosbacher said, " U. S. consumers have a much wider range of choice on how much they pay for a specific part, whether installed or uninstalled. If U.S. consumers shop for the best price, they will almost always find parts less expensive than Japanese consumers do. Japanese consumers do not enjoy this choice in the auto parts market."

Virtually no U.S.-made parts were found at auto parts outlets in either Tokyo or Osaka. Mosbacher observed, "This fact alone raises questions about the ability of U.S. parts suppliers to have fair access to the Japanese aftermarket. "