DETROIT -- Honda Motor CFO Fumihiko Ike has acknowledged the automaker is losing money on its exports of vehicles from Japan to the United States.
“Our export business doesn’t make any profit” on vehicles shipped to the United States, Ike told Automotive News Asia Editor Hans Greimel in Tokyo.
So all the cars you’re sending over there from here in Japan, Greimel asked, aren’t profitable?
“Losing money,” the CFO responded.
So is Honda dumping? Are other Japanese automakers?
In online comments in response to Greimel’s story, some of our readers made that accusation.
Time out, folks.
Dumping is a very specific legal term, with a clear set of criteria that must be met before it can be proven. I don’t think Honda’s operations meet those criteria. But the issue is a complex one that can confuse even those who should understand international trade law
The first time I ran into that confusion was during an interview I did in 1977, back when U.S.-Japan trade disputes were a staple of reporting from Japan.
The head of Japan’s industrial fastener association was incensed at the United States, which was preparing to impose anti-dumping duties on nuts, bolts and other fasteners from Japan. I was interviewing him in his offices across the street from Tokyo Tower.
“We’re not dumping!” he insisted. “Because of the yen’s strength against the dollar, we may have to sell below cost for a while to maintain our market share, but we’re not dumping.”
Ahem, I thought. How do you define dumping if selling below your costs doesn’t qualify?
In fact, my understanding was wrong -- sort of. Selling below cost is one of three main criteria for determining whether a foreign producer or industry is guilty of dumping goods in the United States. The second: The imported goods also must be shown to be damaging a U.S. producer of the same goods. Which sort of gets to the third criteria: the goods must be imported “in quantity.”
It sure sounds like Honda meets the “selling below cost” test. But is anyone being damaged? Are the quantities enough to matter?
It’s hard to believe that any domestic automaker has been damaged by Honda’s sales of 3,547 Honda Insight hybrids, down 65 percent through May. Its main rival is the imported Toyota Prius C.
Are sales of the imported Honda Fit hurting sales of the Ford Fiesta? Through May, sales totaled 19,706 Fits, down 33 percent, and 26,737 Fiestas, down 27 percent. Hmm. And if you’ve priced a Fit lease recently, you know Honda’s not undercutting anybody.
Asked about the allegations, a Honda spokesman pointed out that 87 percent of the vehicles Honda sells here are built here.
I’m no lawyer, but I suppose it might, perhaps be possible for another automaker to prove that it was being hurt by Honda’s selling a limited number of imported cars at unprofitable prices. I never rule out anything with the American legal system. But would it be worth the time and legal fees? Doubtful.
Here’s a more intriguing question.
If Honda is losing money on sales of its imported Acuras, are Lexus and Infiniti imports also unprofitable? Are those cars being dumped?
For an automaker, proving dumping is an extremely costly and complex task, which involves sorting through reams of a competitor’s data and releasing lots of your own data -- all for the sake of what remains a dubious outcome. I honestly don’t expect any domestic automaker to go to the U.S. government in hopes of getting anti-dumping penalties imposed on a Japanese automaker.
But I do expect to see more production of Japanese vehicles shifted to North America from Japan. If it was built here, it wasn’t dumped.
