Toyota Wants To Invade Japan (Here's How)

Issue #123

Happy Saturday!

Are you a fan of American cars or do you prefer Japanese? What about American cars sold in Japan under a Japanese name? Here’s what we mean.

Market News

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In The Know

Toyota wants to invade Japan, with US-made cars.

$19 billion can cause a large dent in any country's wallet, and that's what Japan is bracing for in 2025. The 25% tariff imposed on Japanese vehicles has impacted the country's economy with almost immediate effect. 

Mazda, Subaru, and Toyota are all bracing not only for a challenging second half of the year but, as this article explains, for the short-term future. 

Toyota, one of the world's biggest producers, has had to change its strategy to cope with the situation. At the same time, it has warned the market that rising costs will be almost unavoidable, and this is not only true for new cars. 

This article dives into other Toyota aspects that will cost more. 

Tariffs are not new; throughout history, we've seen how they can spark radical changes in the automotive industry.

One of the most (in)famous tariff cases was the Smoot-Hawley Tariff Act of 1930. With the country deep in the Great Depression, this Act included tariffs on imported goods, including cars, made to protect domestic industries. 

However, a combination of factors led to a 61% drop in US exports. You can read more about it here. 

Then, in 1981, the Voluntary Export Restraints imposed tariffs and capped the number of Japanese cars that could enter the US. The move was a result of Japanese cars, which were more economical and reliable, becoming extremely popular after the fuel crisis. 

In no time, Japan became one of the leading automakers in the world, as this list highlights. 

As a consequence of the restraints, Japanese automakers shifted production to the US to circumvent them, and they also expanded their offer, including more luxurious vehicles. This ironically led to fascinating cars such as the Celica Supra coming to the US. You can read more about this here.  

Also, they were one of the leading causes for the birth of Lexus, Infiniti, and Acura. Learn more about the history of Lexus here.  

As you can see, tariffs aren't new, and so are the strategies that automakers use to cope with them. This isn't the only consequence of the relationship between Japan and the US. 

Tariffs are one part of the story, but the reality is that the US has had a tough time breaking into the Japanese market. Although it's a recent topic, it's a discussion that has happened for years, as this article explains. 

American automakers don't stop trying because the Japanese market is enticing, and a cheaper, US-made product could command a higher price. This has led to some creative ideas. 

You might not have heard of it, but there's a Cavalier, and it's not a Chevy. Instead, it's a Toyota Cavalier, the brainchild of a goodwill agreement between General Motors and Toyota and one of the most creative efforts in history. 

The idea was to sell a Chevrolet Cavalier rebadged as a Toyota. It was mechanically identical, except for steering on the other side. But there was a problem. 

The Cavalier is small by US standards, but it's massive for Japanese roads and, most importantly, fuel prices. The hefty 2.4L engine turned off potential buyers. 

The partnership between Toyota and GM aimed to sell 40,000 in a year. It sold 37,000 in four years, and the Toyota Cavalier faded into oblivion, but you can read more about it here.  

Curiously, it's not the only time this has happened. The Ford Taurus SHO is a lovely, atypical version that has risen in value among brand enthusiasts. 

Japan failed to appreciate its personality, and it, too, failed there. Here are six other fascinating examples. 

There's a saying: insanity is trying the same thing over and over again and expecting different results. Why am I referencing it here? 

Because Toyota is looking to sell US-made cars in Japan, again, as this article explains. This time, it results from tariffs, but it might be different. 

After all, the US is producing smaller cars, and it's doing so right. Perhaps it's finetuning the equation to make a coveted car for Japan. 

In the end, these strategies, such as restraints, tariffs, and production caps, rattle the automotive industry. At the same time, they spark change and creativity, with some bad results and some great. 4

Let's see what happens.