With more people in Japan beginning to think that there is nothing special about imported cars, foreign automakers can no longer rely on their once luxurious brand image to do the selling for them.Now foreign carmakers are finding themselves in increasingly fierce competition with domestic automakers. “Clearly the car market in 1997 is going to be one of the toughest in recent years with the impact of (consumption tax rate) changes (in April) and fierce domestic maker activity,” Rover Japan President Peter Woods said.Officials of foreign automakers also say that the recent depreciation of the yen is hitting them hard, as intensifying competition does not allow for a simple raise in prices to cover up losses from exchange rate fluctuations. Analysts say that while imported car sales are likely to continue increasing, the pace of growth will be slower and it will be difficult for all of the competing foreign automakers to succeed.”Until 1992, imported cars were sold in a limited market at high prices, taking advantage of their good brand image,” said Mashu Kato, an automobile industry analyst at NLI Research Institute affiliated with Nippon Life Insurance Co. “In the three years that followed, sales of imported vehicles rose rapidly as foreign automakers actively reduced prices eased by the yen’s appreciation.” Kato said, however, that little room is left for foreign automakers to reduce prices further and still be profitable during the yen’s current downward trend. Imported vehicle registrations, including Japanese models imported from production facilities abroad, rose 10.1 percent in 1996 to 427,525 units, or 8 percent of total registrations. In Tokyo alone, imports made up 13 percent of all registered vehicles.Reflecting their various successes and failures, foreign automakers are shifting their attention from sales volume and dealerships to after-sales service quality and designs that better reflect the tastes of Japanese customers. Earlier this week, Hiroshi Okuda, president of Japan’s market leader, Toyota Motor Corp., remarked rather frankly that Chrysler’s Neon and Ford’s Taurus are not selling as planned in the Japanese market because the models do not meet local tastes in terms of styling, both inside and out. Although his remark may sound sensational, it can also be interpreted as a message to the Big Three American automakers that to compete, they should put their energy into areas where they are strong.In 1996, sales of vehicles imported from five European nations — Britain, Germany, France, Italy and Sweden — rose 16.2 percent, backed by better-than-expected sales from such firms as the Volkswagen Group. Sales by U.S. automakers, however, rose only 3.1 percent, due to sluggish sales of new models belonging to Ford Motor Co. and Chrysler Corp.NLI’s Kato said it will be difficult for American automakers to compete in the small passenger car market, although the area is seen as having great potential because of the aging of Japanese society and an increasing concern for the environment. But if foreign makers decide to pursue that market, they should make better use of their subsidiaries in Europe in developing models for the Japanese market, Kato said. “European automakers are strong at developing and designing small cars, so this area can become a target for them, because Japanese automakers have not yet put full effort into this relatively less profitable field, especially concerning safety features,” he added.
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