By offering smaller, more affordable cars and increasing their visibility in the marketplace, foreign automakers are gradually increasing their presence in Japan.

Imported cars make up around 9 percent of the entire domestic passenger car market. In recent years, however, some automakers have managed to increase their share of the pie.

“(Imported) cars that have a strong and original character are expanding their share of the market,” said Seiji Sugiura, senior analyst at Nomura Securities Co. “The number of small imported cars, which are more affordable, are also on the rise.”

While many of Japan’s top-selling cars are priced no more than 2 million yen, around 60 percent of imported cars marketed here are above 2 million yen.

But with the debut of smaller and cheaper imported cars on the domestic market, things are set to change.

Peugeot S.A.’s 1.4-liter engine 206 model car costs 1.7 million yen, while the 1.6-liter version goes for 1.9 million yen. The New Fiat Punto is available with a 1.3-liter engine for 1.57 million yen and a 1.8-liter engine for 2.18 million yen.

Ford Japan Ltd. said its 1.6-liter Ford Focus, priced between 1.97 million yen and 2.17 million yen, is currently the company’s most popular product.

“The Peugeot 206 is not as big as (Toyota Motor Corp.’s) Corolla, but not as small as a minicar,” said Tetsuro Kawasaki, spokesman for Peugeot Japon Co. “And it’s enough to show how different you are (through owning it).”

The French automaker sold 5,871 units in the first half of this year, recording a double-digit increase of 11.7 percent and a record high for the half-year period. The 206 series accounts for about 60 percent of Peugeot’s sales, according to Kawasaki.

While introducing small cars has been successful for some foreign automakers, others are making inroads by utilizing alliances with partners in Japan.

French automaker Renault SA, which tied up with Nissan Motor Co., began building an exclusive distribution network in May 2000, taking advantage of its interrelationship.

Since then, Renault’s vehicles, including its top-selling 1.6-liter Lutecia series and the 1.2-liter Twingo, have been sold through Nissan dealerships. The two brands, however, are separately marketed, according to Renault.

The strategy has paid off, with Renault Japon Co. registering 1,393 sales in the first half of this year, a year-on-year surge of 50.8 percent.

“We learned about the (Japanese) market last year,” said Roberto Pallotta, president of Renault Japon Co. “Since we were able to get our distributors to learn more about the products before marketing them, we’ve been getting good results so far.”

The company’s sales strategy is aggressive. It plans to have 80 Renault distributors by the end of this year, increasing to 150 exclusive distributors within a few years, the firm said.

DaimlerChrysler Holdings Japan Ltd. has had similar success marketing its Chrysler vehicles. While sales of its luxurious Mercedes-Benz brand cars have shown a steady 8.5 percent climb, Chrysler models increased by 17.4 percent to 4,199 units.

DCJ spokesman Shinji Kuroiwa said the firm has put together 59 exclusive distribution networks for its American cars in Japan by utilizing the already existing Mercedes-Benz after-sales service and distribution network.

The importance of an exclusive distribution network, which enables the provision of full-fledged customer support and service, is acknowledged by a growing league of foreign carmakers.

Tsutomu Umeno, president of Volkswagen Group Japan, said his company launched a brand promotion campaign in November, hoping to boost market visibility and establish exclusive dealerships.

In the first half of this year, Volkswagen sold 32,170 units, up 9 percent from last year, making it Japan’s top-selling foreign carmaker. The company’s 1.4-liter Lupo compact, which hit the market in July, has also been selling well, the company said.

“There are people who know our Golf model, but aren’t familiar with the name Volkswagen. We want more people to recognize Volkswagen,” VGJ spokesman Hiroshi Ikehata said. “Since we aim to introduce our full lineup in the near future, we need our own distribution network and our brand name to be recognized.”

Foreign automakers, which concentrated on the profitable luxury car market through the bubble period, have been forced to seek out new markets, said Nomura Securities’ Sugiura. Learning a lesson from the past decade, they are developing new marketing strategies, he added.

“Even during the recession, people have a desire to spend their money, and they are willing to pay the price if they think it’s worth it,” he said.

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