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RUEHBS/USEU BRUSSELS PRIORITY
RHEHAAA/WHITE HOUSE WASHDC PRIORITY
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RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC PRIORITY
RUEAEPA/HQ EPA WASHDC PRIORITY

UNCLAS SECTION 01 OF 03 TOKYO 000221 
 
SIPDIS 
 
STATE FOR EAP/J 
STATE ALSO FOR S/SECC, OES/EGC, AND EEB/IEP 
PASS TO USTR FOR DUSTR MARANTIS, AUSTR CUTLER AND M. BEEMAN 
PASS TO COMMERCE FOR H. MISISCO, K. ROTH, D. BARZDUKAS 
PASS TO EPA FOR S. FULTON 
PASS TO DOT FOR L. LAWSON, C. MILTTELHOLTZ 
 
E.O. 12958: N/A 
TAGS: EIND ETRD SENV PREL WTRO ENRG JA
SUBJECT: JAPAN TO ANNOUNCE WHICH U.S. VEHICLES QUALIFY FOR 
ECO-CAR SUBSIDY PROGRAM 
 
REF: 09 TOKYO 2926 
 
TOKYO 00000221  001.2 OF 003 
 
 
SENSITIVE BUT UNCLASSIFED.  CONTAINS BUSINESS SENSITIVE 
INFORMATION. 
 
¶1.  (SBU) Summary:  Japan is expected to announce February 3 
at 7:00PM Tokyo time which U.S. vehicle models will qualify 
under its recently revised eco-car subsidy program.  In 
response to USG and U.S. industry criticism, the GOJ 
announced January 19 it will begin accepting foreign fuel 
efficiency data to determine eligibility of low-volume 
foreign imports for the program.  However, despite 
interventions by the Embassy and visiting USTR officials, 
including Ambassador Marantis earlier this week, the GOJ 
opted to not consider USG requests to use the U.S. 
Environmental Protection Agency (EPA) combined fuel economy 
estimate to determine the eligibility of U.S. models. 
Instead, the GOJ will utilize the EPA city measurement. 
Although U.S. automakers are pleased that some of their autos 
may qualify for the subsidy, most local media coverage has 
portrayed U.S. autos as inefficient and as beneficiaries of 
political pressure brought to bear on the GOJ by the USG. 
End summary. 
 
¶2.  (SBU) The GOJ program, begun April 2009 and extended 
through October 2010, offers a cash subsidy of approximately 
$4,500 to consumers who scrap older vehicles and purchase 
models that meet certain fuel efficiency standards.  Because 
most U.S. autos are imported to Japan under a low-volume 
import procedure (the "Preferential Handling Procedure" or 
PHP) that does not utilize Japanese fuel efficiency data, no 
U.S. autos qualified for the original Japanese "cash for 
clunkers" program.  However, the GOJ revised the program and 
announced January 19 that cars imported to Japan under the 
PHP would qualify for the cash subsidy.  Ministry of Economy, 
Trade and Industry (METI) officials informed econoffs 
February 3 that the GOJ would use the EPA city mode to 
determine eligibility, and that the list of qualifying 
foreign autos would be released to the public at 
approximately 7:00PM Tokyo time the same day.  With this 
revision, METI has calculated 47 percent of all U.S. autos 
imported to Japan under the PHP will qualify for the subsidy. 
 In the public announcement, which METI has told us it 
intends to post "quietly" on its webpage 
(www.meti.go.jp/english/index.html) with no formal media 
release, only the names of the models that qualify for the 
subsidy will be listed, but not the percentage of total 
imported autos nor the fuel efficiency calculation method. 
 
¶3.  (SBU) According to METI, eight types of U.S. autos, 
listed below, will qualify for the cash subsidy: 
 
General Motors 
-------------- 
 
--Cadillac CTS 2.8 (ABA-X322A) 
--Cadillac CTS Sport Wagon 3.6 (ABA-X322B) 
--Cadillac CTS Sport Wagon 3.0 (ABA-X322C) 
--Cadillac STS 3.6 (ABA-X295S) 
--Hummer H3V8 (ABA-T345E) 
 
Ford 
---- 
 
TOKYO 00000221  002.2 OF 003 
 
 
 
--Ford Escape Limited/XLT (ABA-LFAL3P) 
 
Chrysler 
-------- 
 
--Chrysler Grand Voyager (ABA-RT38) 
--Dodge JC SXT (ABA-JC27) 
 
¶4.  (SBU) In the run-up to the decision, METI Vice Minister 
Hiroyuki Ishige presented the following nonpaper to Deputy 
USTR Marantis in Tokyo in an effort to explain the rationale 
for the GOJ's fuel efficiency calculation method. 
 
Begin text: 
 
The mode for "eco-car subsidy" 
 
1)  From the standpoint of expanding options for achieving 
eco-friendly society while stimulating economy, PHP cars have 
been decided to be covered by Japanese eco-car subsidy scheme. 
 
2)  The U.S. "City mode" incorporates freeway run with high 
fuel efficiency. 
 
3)  Since conversion of modes among different countries is 
technically impossible, we made a decision to adopt the most 
equivalent modes to Japan, where the ratio of downtown 
driving vs. highway driving is 1:3, in the U.S. and Europe 
when we include PHP imported cars under our subsidy scheme. 
They are U.S. "City mode" and European "NEDC mode." 
 
4)  If we directly adopt Japanese mode to U.S. PHP imported 
cars, no car would enjoy the benefit.  However, when we adopt 
these modes, approximately 50 percent of U.S. cars and 40 
percent of European cars could be covered by subsidy scheme 
in terms of sales. 
 
5)  The results show the fairness among chosen modes. 
 
End text. 
 
¶5.  (SBU) In a separate meeting February 2, Japan-based 
Detroit 3 automakers told USG officials that due to 
differences in weight classifications, driving styles, and 
test methods, significant differences exist between Japanese, 
U.S., and European fuel efficiency calculation methods. 
Although U.S. automakers would prefer that as many U.S. autos 
qualified for the program as possible, Japan-based Detroit 3 
representatives privately stated they agree with METI that 
the EPA city mode most closely corresponds to the Japanese 
fuel efficiency measurement.  One representative expressed 
concern that the Japanese weight classification method makes 
heavier cars appear less fuel efficient.  (Note:  U.S. autos 
imported into Japan are mostly larger, heavier, high-end 
"lifestyle" vehicles.  End note.)  As a result, he noted, the 
Japanese eco-car subsidy program reinforces an image that 
U.S. autos are inefficient. 
 
¶6.  (SBU) Comment:  Although the Japanese eco-car subsidy 
program initially excluded all foreign autos imported under 
the PHP, the media coverage of this issue has instead focused 
on the fact that U.S. autos did not meet Japanese fuel 
 
TOKYO 00000221  003.2 OF 003 
 
 
efficiency standards and now will receive an "exception" due 
to U.S. political pressure.  Although the U.S. automakers are 
pleased that some of their autos will qualify for the 
subsidy, media attention unfortunately appears to have 
reinforced a recurring image problem the U.S. auto industry 
in Japan faces:  that American cars are not fuel efficient. 
GOJ officials and industry players have expressed their hope 
this issue does not develop into a major trade irritant 
between the U.S. and Japan, particularly in light of 
challenging issues in other areas of the bilateral 
relationship. 
ROOS