Life & Style | Motoring
Japan's cars a tough sell in Europe
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.
- Reuters
- Published: 23:41 October 3, 2008
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.
Hybrid technology
Making a dent in global luxury car markets is important for Japanese auto-makers 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 per cent of global sales in 2007, it accounted for 16 per cent of Toyota's operating profit.
Toyota has been trying to use its lead in hybrid technology to sell the Lexus brand in Europe, 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 US-centric," Toyota Europe head, Tadashi Arashima. told Reuters.
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. "I would say it will be difficult for Japanese premium brands to really step in that market."
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