The Japanese car market has proven to be a really tough place for U.S. manufacturers, who have claimed that protectionist policies keep them out of the third largest car market in the world but the reality is more complicated than that.

Japanese brands account for 90 percent of the domestic car market in Japan and a big role in this is due to the special relationship between the customer and the dealer. Japanese buyers are used to having a much closer relationship with the dealer compared to the Western standards.

According to a report from the Atlantic, a dealer from a Japanese brand will build a relationship with their customers by bringing demo cars to the customer’s house, offer free car washes for life, handle their insurance policies and remain generally in contact with them, offering a service that’s considered kind of a custom in the country.

This hospitality is what helps the Japanese automakers remain dominant in their home market and is also what baffles American dealers that aren’t used to provide this kind of service.

In the U.S. market the domestic brands remain dominant but with a much smaller share of the pie, with the Big Three -GM, Ford, FCA- making up 45 percent of the market and the Japanese brands accounting for 39 percent. This dynamic contributes in part to the trade imbalance between the U.S. and Japan: last year it was $68.9 billion and a large share of it came from vehicles and from automotive parts ($52.6 billion).

This has long been an issue for politicians, including Trump who said earlier this year that the Japanese “make it impossible to sell cars in Japan”. American carmakers also use the same line of argument, accusing Japan of protectionist policies saying that practices like requiring lengthy car inspections of foreign-made vehicles and prohibiting existing dealers from selling foreign cars have prevented non-domestic car companies from gaining a larger share of the market.

However, protectionism is not the full explanation of why Japanese customers don’t buy foreign cars. For example, there are no import tariffs on cars, whereas the U.S. and EU impose 2.5 percent and 10 percent tariffs.

Instead, the problem lies in large part in the hesitance of American car dealers to invest in the kind of network that Japanese consumers have come to expect. “The way Japanese consumers buy cars is very different,” Deborah Elms, the executive director of the Asian Trade Center said. “Yet the Americans have not invested in a dealer network to break into the market.” Indeed, Ford has pulled out of Japan, where it had sold just 5,000 units annually while GM has only 28 dealerships in the country, managing to sell just 1,000 cars in 2016.

Japanese customers expect to receive services like free maintenance from their dealers and picking up their car for a check-up, performing it and then return it. This sort of dealer network is expensive to develop but also to maintain.

Not all foreign companies though struggle with Japan; imports from EU grew five percent between 2013 and 2016, with 251,115 cars while imports from the U.S. shrank by 15 percent for the same period, to 19,933 cars. Brands like Mercedes and BMW saw their sales growing by 60 percent and 23 percent respectively between 2012 and 2016.

BMW for example decided three years ago to redouble its efforts in the Japanese market, spending $675 million to refurbish its dealer network. “In Japan, everything is about hospitality,” Peter Kronschnabl, the CEO of BMW Group Japan and the chairperson of the European Business Council’s Automotive Committee and the Japan Automobile Importers Association, said. “If you are not into this, it will be very difficult to succeed in the Japanese market.”

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