Until a few years ago, U.S. cars exported to Japan had the driver controls on th

Question

Until a few years ago, U.S. cars exported to Japan had the driver controls on the left side (as in the United States). The Japanese (like the British), however, drive on the left side of the road, so Japanese cars sold in Japan have the driver controls on the right side. Sup-pose the Japanese tried to sell their cars in the United States with the driver controls on the right side. What impact would this likely have on their sales in this country? Do you think the unwillingness of U.S. carmakers to put the driver controls on the “correct” side for exports to Japan had any effect on their sales of cars in that country?

Explanation / Answer

When Japanese decide to sell their cars in the United states, with opposite driver controls, they will face an unresponsive market demand and demand will be less than expected.

This will lead to losses for Japan, as their exports will fall.

In order to increase their exports, they will try to change their driving controls to the opposite side to match that of US preference.

As a result, demand for Japanese cars will increase in US, thereby benefitting Japan.

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