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Japanese automakers race to catch up in China

By Yasuaki Kobayashi and Yasushi Kouchi, The Yomiuri Shimbun –

TOKYO — Sales of luxury vehicles to the affluent buyers have been booming in China, the biggest automobile market in the world, while the number of first-time car buyers is also on the rise in small and midsize cities in the country.

Although European and U.S. automakers entered the Chinese market earlier than their Japanese counterparts and have bigger market shares, Japanese automakers are going on the offensive by introducing new models and lowering prices for Chinese consumers by producing in China.

An official of Italian luxury sports car maker Lamborghini, who is in charge of marketing in the Asia-Pacific region, expressed high expectations for the Chinese market on the eve of the opening day of the 2012 Beijing International Automotive Exhibition in late April.

He said he was pleased to see that China would become the No. 1 market for luxury goods in the next decade.

At the Beijing auto show, Lamborghini unveiled for the first time the latest model of its sport-utility vehicle, Urus. The model on display was red and had a sharp front grill, features preferred by Chinese customers.

While the overall growth rate of auto sales in China has fallen to the single digits, that of luxury cars in 2011 jumped more than 30 percent from the previous year.

German automakers Audi, BMW and Mercedes-Benz dominate the luxury car market in China — and its larger profit margins — with a combined market share of 70 percent.

Japanese automakers get left in the dust by their German rivals because Chinese consumers are less aware of Japanese brands. Also, Japanese automakers have lagged behind their German counterparts in local production, according to a Chinese analyst.

But Japanese vehicle makers are not sitting by idly.

Nissan Motor Co. in April moved some departments of its Yokohama head office to Hong Kong — including one in charge of marketing their line of high-end Infiniti vehicles — to better position itself to manufacture cars that cater to Chinese consumers. The company also is planning to start production of the model in China in 2014.

Toyota Motor Corp. has unveiled its new Lexus model, an up-market car, with wider back seats suited especially for Chinese customers.

The demand for low-priced cars is also increasing in smaller cities in China. A joint company of Nissan and its Chinese partner unveiled 10 new models in the Chinese city of Kaiping in late April.

Notable among the new models was the low-priced Venucia, which starts at 67,800 yuan (about $10,700). The model is aimed at young people living outside of major cities with annual income of about 100,000 yuan (about $15,700).

Nissan is planning to hold further marketing events at more than 100 locations around China to attract consumers in inland cities.

Competition in China will intensify further as Toyota and Honda Motor Co. are also focusing on marketing low-priced cars.

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