Serving the World's Largest Emerging Automobile Market
Home > Feature > Market-based technologies help Japanese brands recover

Market-based technologies help Japanese brands recover

“It will take Japanese brands a very short time to recover in China’s automotive market,” an executive of a Japanese brand told the media in October 2012.

Many Chinese people rejected Japanese cars because of conflicts on the Diaoyu Island between China and Japan in 2012. Sales of locally produced Japanese-branded passenger vehicles dropped more than 40 percent year-on-year in September 2012. Market share hit a record low of 15.2 percent. Some Japanese brands even considered possible relocation of factories to Southeast Asia.

Japanese brands recovered a year later. According to data from China Passenger Car Association (CPCA), sales of locally produced Japanese brand passenger vehicles reached 322,800 units in November 2013, a year-on-year increase of 95.6 percent, much higher than the 23.6 percent increase in the overall passenger vehicle market. Japanese brands ranked 2nd in passenger vehicle sales, overtaking those of German brands. Sales volume also exceeded the monthly high achieved in 2011 and contributed to nearly all of the sales growth of passenger vehicles in November.

 

Sales of Passenger Vehicles by Brand Origin in China in November 2013 

Brand origin

Nov. 2013

Nov. 2012

% Change

China

564,400

638,600

-11.61

Japan

322,800

165,000     

95.6

Germany

262,900

269,800

-2.6

U.S.

214,700

190,800

14

South Korea

145,000

143,000

1.4

Industry

 

 

23.6

                                                                                                                        Source: CPCA

 

The Japanese brands in China have recovered.

The price-performance of Japanese vehicles is not as good as that of Korean vehicles. In terms of technological innovation, they are not as good as German brands. It may also be difficult for Japanese brands to overcome Chinese independent brands because of government protection. But market-based technologies have helped Japanese brands regain and even expand their market share.

The territorial dispute has helped Japanese brands in a sense. It has driven them to dig deeper into the Chinese market and stop simply pandering to customers. The strategies of conservative Japanese carmakers in China have changed as a result.

Japanese brands maintained consumer confidence through reassurance measures for existing customers and discounts for new customers at the end of 2012. They overcame the adversity in 2013 and gained in-depth knowledge of the Chinese market.

Japanese cars perform well in comfort and fuel efficiency. German cars emphasize power and technology. Technologies such as DSG and FSI are widely adopted by German cars to seek better power performance. Nevertheless, German brands – Volkswagen in particular – have been frequently recalled because of powertrain problems.

On the contrary, Japanese cars pursue technological stability. It is difficult to judge which technology is better, but stable performance of a car may be more important for customers.

Take GAC-Honda’s 9th generation Accord for example. Monthly sales of the model topped 10,000 units less than three months after market launch. With sales of 13,703 units in November, not only did it rank 4th in B-Class segment sales, it was also the fastest growing among all B-Class cars.

The model was an underdog when it hit the market. The starting price of the car is ¥206,800 ($34,163), higher than that of Dongfeng-Nissan’s New Teana (¥177,800) and GAC-Toyota’s New Camry (¥179,800), as well as other German and American competitors.

The 9th generation Accord’s wheelbase is slightly shorter than the previous generation. That is considered as a disadvantage in the Chinese market where long wheelbase is preferred. But the Japanese brands’ sensitivity to market has been underestimated. China’s young consumers especially the post-80s generation are no longer keen to long wheelbase. Cars integrating stable output power, comfortable driving experience and decent appearance have become more popular in China.

The 9th generation Accord looks decent after it was redesigned based on its imported version in accordance with Chinese consumer preferences. Powered by the 2.4L i-VTEC engine, the car is 13 percent more fuel efficient and offers 8 percent more peak torque, while its CVT transmission helps improve driving experience. Taking of these advantages, the model beat its German rivals in the B-Class segment cars priced above ¥200,000.

Consumers tend to judge a car’s brand position from its starting price. A higher starting price usually represents a higher brand position. With excellent fuel efficiency and output power, the cost performance of the 2.4L 9th generation Accord is still better than its competitors.

Low-priced versions of a vehicle model often enjoys better sales in China, but sales of the 2.4L and 2.0L versions each accounted for half of the sales of the 9th generation Accord. The pricing strategy of the car reflects Japanese brands’ sensitivity to the Chinese market.

China’s car consumption environment has changed significantly. The price or power performance card can only attract so many customers.

The Japanese brands have successfully recovered simply because they understand what technologies are right for the market. 

(Rewritten by Katrina Dong based on author’s article on blog.sina.com.cn)

| | | | |

Leave a Reply