Will Japanese luxury brands ever succeed in Europe?
10-08-08, 03:21 PM
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Will Japanese luxury brands ever succeed in Europe?
This Reuters article certainly paints a pessimistic picture:
Europe has little room for Japanese premium brands
By Chang-Ran Kim, Asia autos correspondent
(Additional reporting by Christiaan Hetzner; editing by Sue Thomas)
PARIS - Japanese automakers will struggle to crack the premium car segment in Europe, where tradition and prestige dominate, making their plans to gain global acceptance for their luxury brands tougher.
After nearly 20 years in Europe, Toyota Motor Corp's Lexus marque sold just 36,000 cars in Western Europe last year, compared with about 650,000 to 720,000 sold each by Mercedes-Benz, BMW and Audi, and a fraction of Lexus' own global sales of 518,300 vehicles.
Even though Lexus, sold in 69 countries, is the top-selling luxury brand in the United States, analysts say it has a long way to go to join the German powerhouses on the global stage.
"They occupy only a fraction of the European market now, and it'll be the same in the future as well," said Koji Endo, auto analyst at Credit Suisse.
Making a dent in global luxury car markets is important for Japanese automakers because high-end cars support profit margins, which are under pressure from the shift to cheaper, smaller cars and the growing need to clean tailpipe emissions.
HSBC auto analyst Seiji Sugiura estimates that while Lexus represented 7 percent of global sales in 2007, it accounted for 16 percent of Toyota's operating profit.
Toyota has been trying to use its lead in hybrid technology to sell the Lexus brand in Europe on the idea of twinning extra power with fuel efficiency, but this has done little to attract customers away from other brands.
"A lot of our Lexus products are still rather U.S.-centric," Toyota Europe head Tadashi Arashima told Reuters at the Paris Motor Show.
Established local brands in Europe, the world's toughest luxury car market, appear confident the gap will not close soon.
"Audi had a long way to go until reaching a position like the one we have today," Rupert Stadler, chief executive of Volkswagen's premium brand, said at the Reuters Auto Summit this week. "I would say it will be difficult for Japanese premium brands to really step in that market."
EPIC
Nissan Motor Co., which follows Lexus into the western European market this month, says it is pursuing a different strategy to ensure its Infiniti brand catches on.
"For us, the introduction in Europe is epic," Nissan Executive Vice President Carlos Tavares said this week at the opening of Infiniti's first showroom in Western Europe, in the posh Mirabeau residential district in Paris.
"It's not just that Europe is a competitive luxury market. It's that we are seeking to change the game a bit."
Nissan Europe Senior Vice President Eric Nicolas said the Infiniti business model would be separated from Nissan proper from the start, with products adapted to local needs. Lexus initially sold its cars in Europe in Toyota showrooms.
"We're not going for a 'me too' product; we're going for the opposite," Nicolas said at the Reuters Auto Summit.
He added that Japan's No.3 automaker had had plenty of time to learn from the mistakes of others and had no illusions about competing head-on with German rivals.
Nissan will first introduce the FX50 sport utility vehicle, the G37 sedan and coupes, adding the G Convertible to its European line-up in mid-2009. It is targeting annual sales of 25,000 Infiniti cars in 2013 in Europe. Last year, it sold 153,000 globally.
Niche or not, Nissan faces a tough time in a market where luxury cars have been hit harder than mass-volume cars this year.
"It's one of the worst times to be entering this market," said Credit Suisse's Endo. "Overall demand in Western Europe is nosediving, not just for luxury cars but small cars. And it's just the beginning."
Honda Motor Co., which established its premium Acura brand two years ahead of Lexus and Infiniti, in 1987, is staying away from Europe for now.
"It's a tough market," Honda Motor Europe chief Shigeru Takagi said recently. "There are so many established brands. To succeed in the Western European market is no small feat."
But Takagi said Honda was considering launching Acura in Russia, where luxury goods are still in high demand.
Audi's Stadler said doing well in Russia was no indication of a successful premium brand.
"Positioning, pricing, product, quality -- all these things have to come together on the right meeting point. If you try to conquer the markets only price-wise, there will always be a question of whether it's the real premium."
http://www.reuters.com/article/rbssA...=10339&sp=true
Europe has little room for Japanese premium brands
By Chang-Ran Kim, Asia autos correspondent
(Additional reporting by Christiaan Hetzner; editing by Sue Thomas)
PARIS - Japanese automakers will struggle to crack the premium car segment in Europe, where tradition and prestige dominate, making their plans to gain global acceptance for their luxury brands tougher.
After nearly 20 years in Europe, Toyota Motor Corp's Lexus marque sold just 36,000 cars in Western Europe last year, compared with about 650,000 to 720,000 sold each by Mercedes-Benz, BMW and Audi, and a fraction of Lexus' own global sales of 518,300 vehicles.
Even though Lexus, sold in 69 countries, is the top-selling luxury brand in the United States, analysts say it has a long way to go to join the German powerhouses on the global stage.
"They occupy only a fraction of the European market now, and it'll be the same in the future as well," said Koji Endo, auto analyst at Credit Suisse.
Making a dent in global luxury car markets is important for Japanese automakers because high-end cars support profit margins, which are under pressure from the shift to cheaper, smaller cars and the growing need to clean tailpipe emissions.
HSBC auto analyst Seiji Sugiura estimates that while Lexus represented 7 percent of global sales in 2007, it accounted for 16 percent of Toyota's operating profit.
Toyota has been trying to use its lead in hybrid technology to sell the Lexus brand in Europe on the idea of twinning extra power with fuel efficiency, but this has done little to attract customers away from other brands.
"A lot of our Lexus products are still rather U.S.-centric," Toyota Europe head Tadashi Arashima told Reuters at the Paris Motor Show.
Established local brands in Europe, the world's toughest luxury car market, appear confident the gap will not close soon.
"Audi had a long way to go until reaching a position like the one we have today," Rupert Stadler, chief executive of Volkswagen's premium brand, said at the Reuters Auto Summit this week. "I would say it will be difficult for Japanese premium brands to really step in that market."
EPIC
Nissan Motor Co., which follows Lexus into the western European market this month, says it is pursuing a different strategy to ensure its Infiniti brand catches on.
"For us, the introduction in Europe is epic," Nissan Executive Vice President Carlos Tavares said this week at the opening of Infiniti's first showroom in Western Europe, in the posh Mirabeau residential district in Paris.
"It's not just that Europe is a competitive luxury market. It's that we are seeking to change the game a bit."
Nissan Europe Senior Vice President Eric Nicolas said the Infiniti business model would be separated from Nissan proper from the start, with products adapted to local needs. Lexus initially sold its cars in Europe in Toyota showrooms.
"We're not going for a 'me too' product; we're going for the opposite," Nicolas said at the Reuters Auto Summit.
He added that Japan's No.3 automaker had had plenty of time to learn from the mistakes of others and had no illusions about competing head-on with German rivals.
Nissan will first introduce the FX50 sport utility vehicle, the G37 sedan and coupes, adding the G Convertible to its European line-up in mid-2009. It is targeting annual sales of 25,000 Infiniti cars in 2013 in Europe. Last year, it sold 153,000 globally.
Niche or not, Nissan faces a tough time in a market where luxury cars have been hit harder than mass-volume cars this year.
"It's one of the worst times to be entering this market," said Credit Suisse's Endo. "Overall demand in Western Europe is nosediving, not just for luxury cars but small cars. And it's just the beginning."
Honda Motor Co., which established its premium Acura brand two years ahead of Lexus and Infiniti, in 1987, is staying away from Europe for now.
"It's a tough market," Honda Motor Europe chief Shigeru Takagi said recently. "There are so many established brands. To succeed in the Western European market is no small feat."
But Takagi said Honda was considering launching Acura in Russia, where luxury goods are still in high demand.
Audi's Stadler said doing well in Russia was no indication of a successful premium brand.
"Positioning, pricing, product, quality -- all these things have to come together on the right meeting point. If you try to conquer the markets only price-wise, there will always be a question of whether it's the real premium."
http://www.reuters.com/article/rbssA...=10339&sp=true
10-08-08, 03:26 PM
#2
Don't forget that "luxury" for Lexus is different than the luxury German marques.
Lexus does not have the types of compact cars that surge huge sales figures. BMW has the 1-Series, MB has the A-Class and B-Class, and Audi has A1. Lexus' smallest sedan is the IS220d, which is still large compared to the afformentioned models.
If Lexus wants to sell the same amount of cars as German marques, they need to "dumb it down" with smaller vehicles. I don't think it will help the brand image to do that.
I would rather have Lexus maintain its luxury standing, and sell less...
Lexus does not have the types of compact cars that surge huge sales figures. BMW has the 1-Series, MB has the A-Class and B-Class, and Audi has A1. Lexus' smallest sedan is the IS220d, which is still large compared to the afformentioned models.
If Lexus wants to sell the same amount of cars as German marques, they need to "dumb it down" with smaller vehicles. I don't think it will help the brand image to do that.
I would rather have Lexus maintain its luxury standing, and sell less...
10-08-08, 03:40 PM
#4
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Great point Phillip. The article should read Lexus really, Infiniti just started and Acura a joke.
Lexus doesn't seem to WANT to conquer Europe. One diesel and 3 expensive hybrids are not going to do it. I don't want to see them go downmarket, they have Toyota for that. They also need to re-do their dealer structure in Europe as well.
Lexus has a great advantage b/c they have been in Europe since 1989 and LOTS of people have bought their used cars since they are cheap and LOVING them. Clearly not for the sport, but for the ease of ownership. Lexus is known in Europe as being the top quality brand, so it also has that going for it.
Finally Lexus has a lot of success behind it, so it is known. It is the 92nd most global brand amazingly. While most of the success is in AMerica, what matters if their countless awards and recognition. Europe is more cynical about brands that us!!!
Infiniti is clueless. They do the right thing by insisting on new, posh dealerships and upgrading interiors and suspensions. They then send Europe 2 SUV lines and 1 car line, EX/FX/G. Holy SUV batman. Then they don't bring any diesels or hybrids. Its like they didn't learn a thing from Lexus or anyone else. While Infiniti has done better in recent years, the brand is still a blip on the radar, outside of New Jersey, the brand has little panache so its going to be a TOUGH sell in Europe. I do give them credit for trying.
Acura, well, don't hold your breathe for them coming to Europe. People have died holding their breathes waiting for one damn V-8, the NSX and RWD. Their stubborness and averagness hurts Lexus and now Infiniti who are TRYING to battle the Germans and move upmarket and be more credible competitors.
Lexus/Infinit/Acura
vs
Benz/BMW/Audi
Its a slaughter.
Germans win!
Lexus doesn't seem to WANT to conquer Europe. One diesel and 3 expensive hybrids are not going to do it. I don't want to see them go downmarket, they have Toyota for that. They also need to re-do their dealer structure in Europe as well.
Lexus has a great advantage b/c they have been in Europe since 1989 and LOTS of people have bought their used cars since they are cheap and LOVING them. Clearly not for the sport, but for the ease of ownership. Lexus is known in Europe as being the top quality brand, so it also has that going for it.
Finally Lexus has a lot of success behind it, so it is known. It is the 92nd most global brand amazingly. While most of the success is in AMerica, what matters if their countless awards and recognition. Europe is more cynical about brands that us!!!
Infiniti is clueless. They do the right thing by insisting on new, posh dealerships and upgrading interiors and suspensions. They then send Europe 2 SUV lines and 1 car line, EX/FX/G. Holy SUV batman. Then they don't bring any diesels or hybrids. Its like they didn't learn a thing from Lexus or anyone else. While Infiniti has done better in recent years, the brand is still a blip on the radar, outside of New Jersey, the brand has little panache so its going to be a TOUGH sell in Europe. I do give them credit for trying.
Acura, well, don't hold your breathe for them coming to Europe. People have died holding their breathes waiting for one damn V-8, the NSX and RWD. Their stubborness and averagness hurts Lexus and now Infiniti who are TRYING to battle the Germans and move upmarket and be more credible competitors.
Lexus/Infinit/Acura
vs
Benz/BMW/Audi
Its a slaughter.
Germans win!
10-08-08, 03:47 PM
#5
Super Moderator
They won't be able to get the vast fleet sales as an import car in Germany, we have an article before stating 60+% of BMW sales there are fleet, & it's ~50%+ for Mercedes. It's like American cars here, they get huge numbers from fleet sales ... plus Lexus refuse to go the diesel route except IS220d, 50-60% of German/European luxury brand sales there are diesels ... & I can't imagine Europe using significant # of Lexus as taxi's ever in Europe instead of the E-class & 5-series that you can see everywhere.
I have seen some Toyota's used as taxis(I think it's the Corona) in some European countries together with the E-class and the 5-series, and I think the taxi companies there don't see the need to go to an imported Lexus model for the extra standard luxury features ... & Lexus still have a very limited dealer network there anyway.
I have seen some Toyota's used as taxis(I think it's the Corona) in some European countries together with the E-class and the 5-series, and I think the taxi companies there don't see the need to go to an imported Lexus model for the extra standard luxury features ... & Lexus still have a very limited dealer network there anyway.
Last edited by Gojirra99; 10-08-08 at 05:25 PM.
10-08-08, 04:30 PM
#6
Pole Position
They will never reach numbers of Germans in Europe and they don't have too. There are so many factors why Germans sell the way they sell, from fleet sales to offering cars that are flat out economy cars with economy price with luxury badge.
Luxury game in USA and Europe is very different. I do not believe there is a entry luxury game in Europe cause big six cylinders in cars like A4, 3 and C are so rare. First of all in that segment cars from Mazda, Ford, Citroen are as good as Audi, BMW or MB but they don't offer big engines and some super pricy but cool otpions that only few buy in their Audis or MBs anyway.
From what I have seen most of A4 are in economy trim, four banger TDIs with cloth seats, manual tranny and 16'-17' rims, pretty much like Mazda 6 standing next to it. Difference between Audi and Mazda is that Audi offers 3.2 engine and makers like Mazda, Ford don't, they stay on four cylinders. Yes there is technology like 3 zone climate, blah blah blah but it costs a lot of money. You can option out Audi with so many things but in the end who in the hell gives 60,000EUR for 2.0TDI that starts at 34K? Very few for sure!
One other thing you will not see in Europe so much are V8 in cars like E or 5. For the price of E500 you can almost buy two E220.
Its a completely different game.
Luxury game in USA and Europe is very different. I do not believe there is a entry luxury game in Europe cause big six cylinders in cars like A4, 3 and C are so rare. First of all in that segment cars from Mazda, Ford, Citroen are as good as Audi, BMW or MB but they don't offer big engines and some super pricy but cool otpions that only few buy in their Audis or MBs anyway.
From what I have seen most of A4 are in economy trim, four banger TDIs with cloth seats, manual tranny and 16'-17' rims, pretty much like Mazda 6 standing next to it. Difference between Audi and Mazda is that Audi offers 3.2 engine and makers like Mazda, Ford don't, they stay on four cylinders. Yes there is technology like 3 zone climate, blah blah blah but it costs a lot of money. You can option out Audi with so many things but in the end who in the hell gives 60,000EUR for 2.0TDI that starts at 34K? Very few for sure!
One other thing you will not see in Europe so much are V8 in cars like E or 5. For the price of E500 you can almost buy two E220.
Its a completely different game.
10-08-08, 07:28 PM
#7
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They won't be able to get the vast fleet sales as an import car in Germany, we have an article before stating 60+% of BMW sales there are fleet, & it's ~50%+ for Mercedes. It's like American cars here, they get huge numbers from fleet sales ... plus Lexus refuse to go the diesel route except IS220d, 50-60% of German/European luxury brand sales there are diesels ... & I can't imagine Europe using significant # of Lexus as taxi's ever in Europe instead of the E-class & 5-series that you can see everywhere.
I have seen some Toyota's used as taxis(I think it's the Corona) in some European countries together with the E-class and the 5-series, and I think the taxi companies there don't see the need to go to an imported Lexus model for the extra standard luxury features ... & Lexus still have a very limited dealer network there anyway.
I have seen some Toyota's used as taxis(I think it's the Corona) in some European countries together with the E-class and the 5-series, and I think the taxi companies there don't see the need to go to an imported Lexus model for the extra standard luxury features ... & Lexus still have a very limited dealer network there anyway.
Vladi great points as well
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10-08-08, 08:21 PM
#10
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The article fails to mention that Lexus is the top (sales-wise) luxury brand in Russia right now, which just became the biggest auto market in Europe this year. In the next several years Lexus will get a nice boost from Europe, and you can be sure more diesel options, as well as hybrid options and Europe-exclusive features and luxuries will show up on Lexus models. Toyota now realizes that Europe needs a totally different approach from other markets, and Toyota will do that for both Toyota and Lexus brand models from now on.
10-08-08, 08:27 PM
#11
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The article fails to mention that Lexus is the top (sales-wise) luxury brand in Russia right now, which just became the biggest auto market in Europe this year. In the next several years Lexus will get a nice boost from Europe, and you can be sure more diesel options, as well as hybrid options and Europe-exclusive features and luxuries will show up on Lexus models. Toyota now realizes that Europe needs a totally different approach from other markets, and Toyota will do that for both Toyota and Lexus brand models from now on.
The article has merit but wasn't fully thought out.
10-08-08, 08:35 PM
#12
I've heard that Lexus Russia is doing well, but a higher ranking was probably a while back. In 2007 Lexus was #4, right behind BMW; however these numbers have fluctuated heavily in the past.
http://b-ru.com/economics/general/sa...s-russia-2007/
Reports are that a 1-series competitor is being considered, that next to the first hybrid-only Lexus may help things.
http://b-ru.com/economics/general/sa...s-russia-2007/
Reports are that a 1-series competitor is being considered, that next to the first hybrid-only Lexus may help things.
10-08-08, 10:44 PM
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I've heard that Lexus Russia is doing well, but a higher ranking was probably a while back. In 2007 Lexus was #4, right behind BMW; however these numbers have fluctuated heavily in the past.
http://b-ru.com/economics/general/sa...s-russia-2007/
Reports are that a 1-series competitor is being considered, that next to the first hybrid-only Lexus may help things.
http://b-ru.com/economics/general/sa...s-russia-2007/
Reports are that a 1-series competitor is being considered, that next to the first hybrid-only Lexus may help things.
