JIN-382 -- A Yellow Peril for Makers of Compacts

The J@pan Inc. Newsletter
Commentary on the Week's Business, Technology and Cultural News
Issue No. 382

Saturday September 2, 2006 TOKYO
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@@ VIEWPOINT: A Yellow Peril for Makers of Compacts

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@@ VIEWPOINT: A Yellow Peril for Makers of Compacts

We drive a vintage Toyota Sprinter, perhaps manufactured as
long ago as 1992. In a dozen or so years we've put
33,000 kilometers on the odometer. When feeling
masochistic, I'm tempted to calculate the cost per kilometer
over the years. That would involve adding up the monthly
parking fee (27,000 yen), the biennial inspection fee
(80,000 yen or so), the cost of gas (think of prices
at French pumps), the sticker price (1 million yen), and
any repairs. Armed with this figure, I could compare
the cost of car ownership with the cost of taking cabs.
I've never done this calculation; for fear I would
sink into a blue funk.

I'm not alone these days.

In Japan gas prices are rising. According to the Oil
Information Center's survey of pump prices, the average
price for regular was 140 yen per liter in August. That
was the highest price since the Center inaugurated the
survey in 1987.

And Japanese in droves are turning to "Kei cars," kei being
the reading of the Chinese character for "lightweight." Kei cars
must displace no more than 660 cc and measure 3.39 meters
or less in length and no more than 1.48 meters in width.
Their Lilliputian dimensions qualify them for lower tax and
insurance rates and exempt them from certification of a
parking space.

Non-commercial Kei cars are distinguished by a yellow
license plate.

Kei cars are so hot that in sticker price used models top
brand-new compacts, normally the more expensive vehicles.

Until now these Kei cars were principally sold in the
hinterland, but city dwellers are now snapping them up. In
Kanagawa Prefecture and Tokyo, where the penetration of Kei
cars is lowest and next to lowest, their sales are

== Entrepreneur Association of Tokyo - September 12th ==

Speaker: Alex Serge Vieux, Publisher of Red Herring
and CEO of Red Herring Inc.
Presentation Title: "Building great companies in the face
of adversity"

Mr. Vieux has kindly offered to fly out from California to
speak at EA-Tokyo's September seminar. He will be drawing
on his extensive expertise as a high-tech journalist,
entrepreneur, professor, and advisor to the French
government. Mr. Vieux is currently responsible for steering
the growth of the organization and guiding the publication's

Date/Time: September 12th 7:00 pm
Location: City Club of Tokyo - Maple Room
(Canadian Embassy Complex)
Language: English
Website: http://www.ea-tokyo.com
Email: info@ea-tokyo.com

The Japan Mini Vehicles Association says sales of cars in
the first period of this year are, at a record 1.72 million
units, up 4.7 percent over the same period last year. With
each automaker churning out new light cars, records can
expect to be broken, but what drew attention was the
breakdown of sales by prefecture.

Kanagawa had the highest percentage gain, 22.6 percent,
followed by Tokyo, 10.1 percent. The two prefectures rank
lowest in dissemination of light cars because unlike cities
in the provinces, where people buy a mini as a second and
maybe even third car, in Tokyo and in Kanagawa cities like
Yokohama and Kawasaki parking space is at a premium. The
"Nikkei Business Daily" quotes an unidentified Kanagawa
dealer in Kei cars of a major automaker as saying, "It's
easy to sell minicars because they are cheap and get good

Minicars have traditionally been in demand as second cars
in the countryside. So the common wisdom has been that a
rise in demand triggered by a jump in the price at the pump
would not be at the expense of sales of compacts. That was
before the era of 140 yen for a liter of gas. A threshold
was crossed. Many city dwellers are now switching from
compacts to Kei cars. In other words, in single-car-garage
homes in Tokyo and Kanagawa choice of car is a zero-sum

Manufacturers of compacts are feeling the heat, especially
because the low rate of ownership of Kei cars in Tokyo-Kanagawa
forebodes accelerated growth of the mini market
as long as gas prices remain high.

Of course, not everyone in Greater Tokyo will trade their
compact, sedan, or SUV for a Kei car. I can't imagine
Junichiro Koizumi or other pols riding in a Daihatsu Miras
to Yasukuni Shrine or yakuza dons tooling around town in
Suzuki Altos. And Lilliputian wheels would not do for the
Brobdingnagian ego of the Alpha male.

If gas prices continue to rise, what will I do? Probably
continue to inch toward 40,000 kilometers in our Sprinter.
Full disclosure: I'm no Alpha male. The missus would never
approve of our goin' mini.

-- Burritt Sabin

==================== ICA Events - Sept 21 ===============

Speaker: Andrew Perons, Manager, Risk & Compliance, Strata
Works K.K.
Topic: "Corporate Governance - The Changing Regulations
and Implications"

Details: Complete event details at http://www.icajapan.jp/
(RSVP Required)

Date: Thursday, Sept 21, 2006
Time: 6:30 Doors open, buffet dinner included
Cost: 3,000 yen (members), 5,500 yen (non-members),

Open to all - Location is Foreign Correspondents' Club


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================ Start a Company in Japan =================

Entrepreneur's Handbook Seminar: 30th of September

If you have been considering setting up your own company,
find out what it takes to make it successful. Terrie Lloyd,
founder of over 13 start-up companies in Japan, will be giving
an English-language seminar and Q&A on starting up a company
in Japan. This is an ideal opportunity to find out what is
involved, and to ask specific questions that are not normally
answered in business books. All materials are in English
and are Japan-focused.

For more details: http://www.japaninc.com/handbook_seminar3/

So Fast Offering Tours of Its Warehouse

So Fast Corporation, an innovative logistics company, is
offering tours of its Heiwajima warehouse. See why 8 of 10
foreign company presidents choose So Fast after a visit.
Read in the autumn issue of J@pan Inc Magazine why
SNOVA Corporation selected So Fast and are glad they did.

For details and an appointment, contact Katsuhiko Kakuchiyama.
Phone: 03-5753-3101
Email: k.kakuchi@so-fast.co.jp

Logistics warehouse Dates:
Sep 1 - Oct 31
Time: 8:45a.m. - noon



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