Why European Cars Cost More Than Japanese Cars in Japan
There are numerous factors contributing to the disparity in car pricing when European and Japanese vehicles are sold in Japan. This article will delve into the two major reasons that make European cars more expensive in Japan and explore the complexities of the importation process.
The High Cost of Powerful Performance
One significant factor is the preference for powerful performance engines in many European car models. These engines are not only more powerful but also come with additional features that contribute to higher production and maintenance costs. Unlike Japanese vehicles, which often prioritize efficiency and reliability, European automakers are known for their robust engines that deliver impressive performance.
European automakers are willing to invest heavily inracing-inspired engines, advanced driving dynamics, and cutting-edge technology. This focus on performance comes at a cost, which is reflected in the retail prices. These cars are meant to cater to a niche market of customers who prioritize a thrilling driving experience over, say, fuel efficiency or low maintenance requirements.
Exotic Materials and Interior Quality
A second reason for the higher prices is the use of exotic materials in European car interiors. Unlike brands such as Lexus, which strive to offer a luxurious experience without unnecessary extravagance, many European automakers go the extra mile to provide premium materials. While this can certainly enhance the aesthetic appeal and comfort of the vehicle, it also drives up the manufacturing costs, which in turn, are passed on to the consumer.
European cars often feature leather upholstery, intricate stitching, and advanced materials that may not necessarily be indispensable. These choices reflect a commitment to offering the highest level of luxury, which can be a significant differentiator for some buyers. However, it is important to note that this approach can significantly increase the overall cost of production, making European cars less affordable compared to their Japanese counterparts.
Government Policies and Importation Costs
Adding to the cost is the fact that Japan, as a major car manufacturer, has policies in place to protect its domestic industry. This can make imported vehicles more expensive. Additionally, when European cars are imported into Japan, several hurdles need to be overcome:
Shipping Costs: The shipping of vehicles from Europe to Japan is significantly more costly than the domestic delivery of vehicles within Japan. This factor adds to the total cost of the car. Import Taxes: A mandatory import tax of 10% on the invoiced value of the car is applied. This is a substantial additional expense that inflates the final price paid by the consumer. VAT on Invoice Price: The Value-Added Tax (VAT) is calculated at 20% on the invoiced price, which further increases the overall cost. This tax is imposed on the value of the car as declared by the importer, making it a significant part of the final price.Finally, given the limited sales volume, importers often have to mark up the prices even more to cover the costs associated with after-sales services, warranty, and other customer support offerings. This practice can push the final price of an imported European car even higher compared to the price of a similarly equipped Japanese vehicle.
Conclusion
The higher cost of European cars in Japan is a complex issue influenced by a combination of factors including performance engines, exotic materials, and government policies surrounding car imports. Understanding these factors can help consumers make more informed decisions when considering purchasing a car from either European or Japanese automakers in Japan.