By on July 26, 2010

Except for Nissan, which outpaced the market, the big Japanese automakers are having a bit of a hard time in China. Toyota and Honda received a lot of bad press in the Middle Kingdom. Toyota for its recalls. Honda for its series of strikes. Whatever the reason, both are losing market share. This doesn’t bode well for the rest of the year, when the red-hot Chinese market is expected to cool down a bit.

In the January-June period, the Chinese market as a whole grew 47.7 percent on the year. Toyota’s Chinese sales grew only 27.4 percent, Honda is up only 22 percent. Market leaders GM (up 48.5 percent) and VW (up 45.7 percent) kept up with the Joneses, I mean, Zhangs. The best of the group was Nissan with a 51.4 percent growth.

No, it’s not as easy as saying that the Chinese have a disdain for everything Japanese and just adore American and German cars. It’s that Nissan has the better cars and the better marketing, while Honda and Toyota have problems. What is their answer?

Discounts.

“Japanese carmakers are rushing to cut prices, which is having repercussions on our operations,” complained a Beijing Volkswagen car dealer to The Nikkei [sub]. To fight back, they have to throw-in navigation systems and other accessories. That hurts an upstanding dealer who’s used to a heavy markup to reward him for the timely supply of  a car that is in high demand.

Toyota is assumed having cut its prices by 10 percent in China. Following Toyota’s lead, Honda also cut prices.

Having the right cars and the right marketing will become increasingly important as the growth cools off. Nobody expects the market to implode. But Zeng Qinghong, general manager of Guangzhou Automobile Group Co., the Chinese partner in separate joint ventures with Toyota and Honda, said: “The time is coming to an end when cars sell if they are simply put on the market. Automakers are entering an era of natural selection.”

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6 Comments on “Two Out Of Three Japanese Not Doing So Well In China...”


  • avatar
    mythicalprogrammer

    “It’s that Nissan has the better cars and the better marketing, while Honda and Toyota have problems.”

    … Their commercial was planets aligning. I think you can just have a Chinese dragon prancing around in a commercial that bring rains upon your car product and it’ll sell. Or say we fung shway the interior and so the chi enter through the car ac system, circulate in the interior, and goes out. Ta da!

    Maybe it’s Nissan designs. Cause I saw their Tilda and what not. So ugly to me but maybe people from that region love it.

    But ~20% ain’t bad, damn businesses always want more.

  • avatar
    wsn

    If Toyonda’s performance in the US auto market is any indication, they are more likely to gain market share in a down market.

    When the market is hot, every crap gets sold. Even Fiats. The traditionally conservative Japanese may not catch the wave as well as the rest.

    But when the market cools and down and people realize they need reliable transportation, they will stay with Toyota/Honda and stay away from Italian or American junk.

    • 0 avatar
      Stingray

      Ehmmm… VW is not exactly Italian.

      And Fiat is not exactly living a rosy life over there.

      Having driven a Fiat for 7 years, I can say that it was anything but junk. It was also very reliable.

    • 0 avatar
      wsn

      Stingray, VW is a company that’s not good at making cars, but good at exploring new markets.

      They first found the American market in the 50/60s and dominated more than 50% of the import market. But now they only have 4% of the import market in the US.

      Then they went to China and dominated more than 50% of the total market there. Right now, it’s about 18% that I heard.

      It takes about one generation to realize VWs are really crappy. I bet VW’s next big move will happen somewhere in Africa.

  • avatar
    Cammy Corrigan

    ““Japanese carmakers are rushing to cut prices, which is having repercussions on our operations,” complained a Beijing Volkswagen car dealer to The Nikkei [sub]. To fight back, they have to throw-in navigation systems and other accessories. That hurts an upstanding dealer who’s used to a heavy markup to reward him for the timely supply of a car that is in high demand.”

    Is this car dealer trying to elicit sympathy because someone is undercutting him and eating into his margins (which are “heavy” by his own admission)? Or am I being really unfair…?

    “I was making money hand over fist and these companies start cutting their prices to sell their cars and it eats into my profits. So unfair!”

  • avatar
    EChid

    Very true. If money is tight, people default to the most reliable cars, often with little consideration given to other aspects…its about money. When cash is flowing freely, people just take on the “eh, I can afford repairs for not-ugly” attitude.

    Take me for example: student, wants fun cheap transpo. Really wants? Fully-loaded Jetta that he adored. Actually gets? Mazda 3 Sport, because timing belts, blown turbos and electrical gremlins are scary.

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