By on January 26, 2012

The good folks who are still convinced that the Japanese car market is closed, can count themselves lucky. Would they have been with me today, they might have doubted their beliefs and strayed from the faith. Today, Lexus finally rolled out its new GS line in Japan. America had already seen it last Summer, and two TTAC testers actually drove the cars.

Today, two straight-laced Lexus executives told reporters in Tokyo that imported cars are so successful that Lexus would like to have some of that success and that they strive to take some of the imports’ growing market share.  Kazuo Ohara, Deputy Chief Officer of Toyota`s luxury arm Lexus said:

“In Japan, there is a strong customer segment that is always interested in buying imported cars, and this is the segment we would like to capture.”

The trouble is, those customers are interested in buying German luxury cars.

Kiyotaka Ise, chief officer of Lexus, identified Germany’s Mercedes, BMW and Audi as the darlings of Japanese customers Lexus would love to lure into its showrooms. Easy call, one look at this table says it all:

Japan`s top selling luxury cars, 2011

Lexus 42,365
BMW 34,195
Mercedes 33,207
Audi 21,166

Indeed, together the Teutonic Top-of-the-line brands sell more than twice as many cars in Japan than Lexus does in its home market.

This won’t change anytime soon. Ohara conceded that it will be a while until Lexus will pry the German iron out of Japanese hands. In Japan, Ohara thinks that this year’s Lexus sales will be only “somewhat higher than the level of last year.”

The growth is supposed to come from elsewhere. “Last year, we sold 404,000 units, and this year, we would like to achieve 510,000,” Ohara said.  That is an ambitious 21 percent growth, the same percentage number Toyota has set itself as a target.

But back to the imported cars Japanese like. It’s not that America does not have Kei cars. Hell freezes over before America produces small cheap boxes with pint-sized motors. (Hold your horses, I know that 0.66 liters are  a pint and a gulp .) America does not have the big bore luxury cars a rich Japanese clientele craves.

Cadillacs imported to Japan in 2011? 1,392 .

Meanwhile, car imports to Japan rose 22.5 percent this year to 275,644, while the domestic market (ex Kei cars) was down 16.7 percent.

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36 Comments on “Germans Outsell Lexus At Home In Japan...”


  • avatar
    RobAllen

    Anyone else looking at that picture want to scream “GET YOU HANDS OFF THE PAINT!”?

  • avatar
    LKre

    Are there any reviews of US-relevant cars in the pipeline? The ones people actually drive, as opposed to “Japanese specs – something” and 1987 BMWs? Where is TTAC’s specialty – entertaining reviews of boring cars? Where are updated reviews of Highlander or GL-Class? Isnt an update for basic X5 way overdue? Overviews of Euro vans and Buicks are very educational, but in New York City, you know, we drive products from Honda, Toyota, Nissan, Subaru, BMW and Mercedec. (Thank you for Cadillac CTS update.) But – focus, focus! :)

  • avatar
    Tstag

    Hmmm is the obsession with ‘reliabilty’ more of an American thing, given that the German car brands are closing in on Lexus in their own domestic market? Have Japanese consumers decided that performance, desirabilty and brand are at least as important, 3 areas where Lexus get’s torn apart in Europe?

  • avatar
    mike978

    I am surprised by how low Lexus sales are in Japan. It looks like Lexus is a dependent upon the US for 40+% of their sales. I knew Lexus sold a pitiful number in Europe (somewhere around 17000 total). BMW et al at least are more balanced with good volume in EU, US, China etc.

    • 0 avatar
      rodface

      I don’t see that as surprising; Lexus began as a US-only marque in 1989, and didn’t come home until 2005 (according to Wiki they were the first of the premium Japanese marques to do so).

      • 0 avatar
        bd2

        Prior to 2005, the LS was sold in Japan as the Toyota Celsior and the GS and ES got their start as Toyota models.

        What the data doesn’t take into account is twofold – (1) the fact that Toyota also sells luxury sedans under the Toyota sub-brands like the Crown Series (Crown Majesta, Crown Athlete, etc.) and the Century (which is the FLAGSHIP of the Toyota fleet, not the LS) and (2) that fleet sales comprise a good % of Lexus sales (as well as sales of Toyota’s Crown Series line).

    • 0 avatar
      Acubra

      From the start all Lexus models have been sold as Toyotas in domestic market. So Lexus is a weird concept for an average Japanese.

      • 0 avatar
        ccode81

        This shows how much Japanese brand cars are down to earth, bread and butter here in both image and price, but not suitable to sell for anything fancy (that also explains no reason to buy foreign mass production badge with risk)
        On the other side, people want to showoff their money wants to buy something more recognizable like German luxury.
        People with money but no wish to showoff always drive Toyota Crown.

        The only guys buying Lexus with own money are those once got upset with foreign luxuries for either reliability or rude dealers, but don’t want to ‘downgrade’ to Crown or Fuga for replacement.

  • avatar
    Pch101

    It’s funny how information can be presented.

    Lexus didn’t launch in Japan until 2005. Now, according to this, it’s the leading luxury marque in Japan.

    It should be impressive to go from zero to top dog within less than a decade, shouldn’t it? Yet somehow, this is being presented of proof that Lexus performs poorly and that Japan is swimming in imported cars, when neither position is accurate.

  • avatar
    carbiz

    This only proves that the newly monied are the first to throw the baby out with the bath-water. Does this have ANYTHING to do with reliability and quality, or the PERCEPTION thereof? If a M-B is the most expensive car I can buy in my market, and I want to prove to my neighbors that I have ‘made it,’ then logic dictates I should buy the Daimler, no?
    If Daimler wants to throw a party over 34k sales in Japan, the world’s 3rd largest market (for now) with nearly 4M units sold in 2011, perhaps they should recork the champagne: they sold 31k units in Canada which has less than half the total vehicle sales as Japan.
    Yes, it is remarkable that the German luxury brands are selling far more, proportionately, than their humbler offerings, but that perhaps proves the point that the roadblocks to selling in Japan are only worth it for the high end vehicles. The lowly Fiat Uno, for example, just isn’t worth the trouble to sell in Japan. Even if Fiat could get the volume, the per unit profit would be non-existent.
    I would think this is self-evident. As I’ve said many times, the fact that NOBODY sells vehicles in any quantity in either Japan or Korea (as evidenced the the OECD figures) suggests VERY STRONGLY that something is up.
    Four million sales seems like a nice bounty. Ford and GM fought over Germany long before their sales reached 3 million units.

  • avatar
    forraymond

    FREE TRADE… MY ASS!

    I we put tariffs back in place, like all these other countries, the sales figures in the US for imports would be similar to Japan.

    Time to wind back the clock and fix the mess “Free Trade” has caused us.

    • 0 avatar
      Pch101

      The US tariff on imported cars is 2.5%.

      The US tariff on imported trucks (the “chicken tax”) is 25%.

      Japan’s tariff on imported vehicles is 0%.

      Of course, it isn’t as simple as that. On one hand, there are workarounds and technicalities that allow automakers to avoid paying the chicken tax for many trucks, so even many trucks can be sold in the US without ever having to pay that penalty. On the other hand, Japan uses non-tariff barriers that effectively raise the cost of importing, which limits the degree and type of competition that one would otherwise expect.

      The fact that Japanese car imports are skewed toward luxury marques is not surprising. Since trade barriers increase costs, it makes sense for importers to target goods that they can sell for high prices, since their odds of turning a profit on the cheaper goods are lower. It’s not worth the bother of dealing with the restrictions if the payoff is small.

      • 0 avatar
        bd2

        The payoff is small b/c Japanese consumers overwhelmingly prefer Japanese brands when it comes to non-luxury cars, just as when it comes to electronics (Samsung and LG have had a hard time gaining a foothold in the Japanese market).

        But despite the falling nos., overall, the Japanese auto market is still one of the largest (look at how many autobrands are in the Canadian and Australian auto markets and they are much smaller than the Japanese auto market).

        Same thing with the Korean auto market; it’s much smaller, but Infiniti, Lexus, Toyota, Honda, Nissan, etc. have all entered the market alongside the Germans b/c they see enough sales/growth to warrant the investment.

        It’s also the reason why foreign automakers show up for the much smaller Busan Auto Show (including showing a concept here and there) while many skip the Tokyo Auto Show.

  • avatar
    WRohrl

    I don’t see how the number of imported cars has anything to do with how well or poorly Lexus sells?

    Isn’t the RX built in Canada only? Thus if someone wants one in Japan, it counts as a Lexus sale AND as an imported luxury vehicle?

    I also have to agree with PCH – The article itself (besides the Chart) seems to give no clue that Lexus sells more luxury cars that any of the 3 Germans. Should it really outsell them all combined? It’s impressive that it already outsells each one of them separately. It would be more interesting to see the comparison in market segment, i.e. LS460 vs. S-Class vs. 7-Series vs A8 etc… to see what really sells in what numbers.

    By the way, that number of imported cars – Is that only foreign brand imports or does it include any cars that Japan, Inc. imports themselves from their transplant factories?

  • avatar
    skor

    Japanese are crazy for European style: Gucci, Prada, BMW, Campagnolo. I once sold some vintage Campy bike components on eBay to a collector in Japan. I kept rubbing my eyes at the final bid price.

    • 0 avatar
      Tstag

      Very true a few years ago I went to Japan and was surprised to see a Rover 75, a very British looking car in the eyes of most non Brits. The Japanese do like European Luxury so I guess this is yet another Foreign Market Ford cant hope to take Lincoln to. Should have kept the increasingly successful and highly profitable Range Rover brand!

    • 0 avatar
      Advo

      The Italians have to get their marketing act together. Fiat could make inroads if they can get Alfa as the stylish, hip alternative to the “stodgy” Germans.

  • avatar
    alluster

    Its funny you say the Germans outsold Lexus while the Lexus has outsold the Germans by at least 25% in a year that severely affected Lexus Production, not to mention that Lexus is fairly new in Japan while BMW and Benz have been selling there since the beginning of time. You can make stats lie any way you want to make it look like Japan is an open market. Let me help you..

    “BMW is Japans number one brand” (for brands that start with letter B). Chevy is the number 1 importer in Japan (for cars imported from America). Chevy is the top seller in Japan (for V8 Pony cars), and so on.

    The Japanese govt must be pleased at how well they have everyone convinced the market is not closed. Its not that hard when there are mouthpieces taking their word for it and spreading the bull. Can i prove it – No, but i would like someone to explain how Chevy can compete in Japan when Toyota can import a Yaris and sell for $14K in US, while Chevy has to sell the sonic for $24K in Japan. Or why did Hyundai completely abandon the market?

    The US continues its tradition of treating them with kid gloves for what was done to Japan in WW2.

    On Topic – The GS in that picture looks very tall, as tall as the two grown men standing next to it. Is there an SUV variant coming?

    • 0 avatar
      Hildy Johnson

      It’s not that the car is tall – the guys a short.

      And I agree with you on the “truthiness” of this piece.

    • 0 avatar
      Pch101

      i would like someone to explain how Chevy can compete in Japan

      GM isn’t exactly adept at making cars that Americans want. What makes you think that they understand the Japanese market any better?

      You domestic fanboys are fooling yourselves to believe that the US automakers would have a chance to succeed in Japan if there were no trade barriers. American brands lack cachet, while the Japanese consumer is highly brand conscious.

      American cars also have large displacement engines that would be taxed to death in a country with no oil and high taxes on both oil and cubic inches. American cars are too large to fit well on their roads and consume too much parking space in a country with limited parking. In short, they offer virtually nothing that the average Japanese car buyer could possibly want.

      Japan’s non-tariff barriers primarily hurt the Germans. The EU is trying to address these barriers because they know that they are the ones who have the most to gain from freer trade. There is no pent-up demand for Silverados and Suburbans in Japan.

      • 0 avatar
        alluster

        “while the Japanese consumer is highly brand conscious.”

        For being brand conscious, 99% of the cars sold are exactly the same, down to the shape, color and size!! Every car is a box on wheels, either in white or silver.

        Thank you for twisting the facts out and taking my question out of context. I was asking why 2 cars one being a chevy and the other Toyota, with the same size, displacement and fuel economy, cost $10,000 apart in japan.

        I see you selectively use use silverados and suburbans as examples, completely ignoring how GM’s Opel specializes in small cars and is one of the best sellers in fuel conscious Europe. Do you think if GM had a chance, they wouldn’t have developed cars catering to the Japanese market? Its the third largest market for crying out loud, and if the worlds Number 1, Number 2, Number 4, Number 5 automakers sell less than 5000 units a month, how can someone believe the japanese propaganda?

        Like I said earlier, Japan must be pleased at how the drones do their bidding. Once you call someone a fanboy, you lose all credibility and i didn’t think you deserved a reply. However, i did cause i have respect for you and you are among the very few totally unbiased.

      • 0 avatar
        Pch101

        Do you think if GM had a chance, they wouldn’t have developed cars catering to the Japanese market?

        No, I don’t. Since you’re a GM fanboy, shouldn’t you know something about how they’ve traditionally done business?

        GM and Ford have long used regional strategies for production and design. Cars built in North America are primarily designed for the Americas. Cars built in Europe are primarily sold in Europe. Cars built in Australia are primarily sold in Australia and New Zealand.

        Neither company has historically been oriented around an export-oriented strategy. There has never been any major push to export large quantities of Opels outside out of Europe. Due to trade barriers and differences in tastes, they have tended to build cars within relatively close proximity to most of those who buy them.

        Now you people are whining that people in Japan don’t want American cars. Why should they want them? They don’t design these cars for the Japanese market. We’re not exactly lining up out the door to get our hands on kei cars, either.

        Japan has a crowded and mature market. It doesn’t make much sense for either GM or Ford to make a big push into Japan. There are much better fish to fry in other markets. This only makes sense for the European luxury marques that are well branded and that can get away with high prices.

      • 0 avatar
        carbiz

        Forget about GM, would you? Let’s assume GM builds crap and the Japanese know this. Why, amongst the 28 members states, the OECD ranks Korea and Japan DEAD LAST amongst all the developed nations polled for ‘foreign’ market penetration of their domestic automotive sector. DEAD LAST. That means that NOBODY sells cars in those two countries. Not VW, not Fiat – NOBODY.
        Sheesh, it took Toys R Us nearly 5 years to open their first store. We can argue to the cows come home that foreigners don’t bother to ‘understand’ the Asian mind, blah, blah, blah, but simple curiosity dictates that you should ask yourself WHY our markets are so open that anyone can sell here, no matter how much it damages our economy? (Or are you not aware that the U.S. has the largest current account deficit of any nation in HISTORY?)
        Is ‘choice’ so damned important to the me-me-me generation that they cannot recognize a threat until they’ve lost their job, home and family first?

      • 0 avatar
        geeber

        carbiz: We can argue to the cows come home that foreigners don’t bother to ‘understand’ the Asian mind, blah, blah, blah, but simple curiosity dictates that you should ask yourself WHY our markets are so open that anyone can sell here, no matter how much it damages our economy? (Or are you not aware that the U.S. has the largest current account deficit of any nation in HISTORY?)

        Open markets have not damaged our economy. Our manufacturing output has INCREASED 30 percent over the last decade. Manufacturing employement is falling, but that is being driven by automation and companies producing more with less (employees, energy and materials). Those productivity improvements should be happening in ANY healthy sector of the economy.

        Foreign manufacturers have opened plants here in the United States (and Canada) that produce vehicles tailored for North American tastes. These plants employ plenty of Americans, and not those in the dreaded “1 percent” category. Of course, they aren’t union members, which is the real problem for some people.

        It’s the same with the domestic steel industry. The United States is one of the top three producers of steel in the world. The steel we produce today is of higher quality than the steel produced during the “good old days” of 1945-80. Of course, the part of the industry that went away consisted of the old, obsolete unionized dinosaur plants, which, again, is the real problem for some people.

      • 0 avatar
        Pch101

        Forget about GM

        I don’t see why I should.

        You’re not reading very clearly. I am noting that Japan has low import penetration and non-tariff barriers that reduce imports. Go back and read my posts on this and other threads.

        The non-tariff barriers are bad for the Germans, because they raise their cost of doing business in Japan. They should make no difference to the American automakers, since Americans don’t make any cars that the Japanese want to buy in quantity, regardless.

        I know that you absolutely love to rant about the Japanese and wave your pom poms for Detroit. But let’s make an attempt to separate the existence of the barriers with the relevance of the barriers. If the US made luxury cars that were popular throughout the world, then you’d have point. But it doesn’t, so you don’t. If Japan got rid of its trade barriers tomorrow, it wouldn’t do a damn thing to increase US sales in Japan. VAG, Daimler and BMW would reap the benefits.

      • 0 avatar
        ccode81

        Japanese alternative of Opel/Vauxhall/Holden, that was called Isuzu.
        almost identical product of Opel was sold at fairly competitive price, plus when they pulled out from passenger car business, dealers were converted to Saturn outlet, and again price were competitive.

        Opel themselves were once very popular to outsell VW in Japan. and the reason they pulled out was not clear to consumers.

        Consumers are not beleiving GM’s longterm strategic commitment to Japan, it seems each time head of GM Japan changes, successor tries to do own different idea.

        Some of the reason imported cars’ local price in Japan becomes expensive are
        1) Cost of setting up dealer outlet, land price is higher here in small island. USD 4 to 5 million equivalent land has to be purchased or rent for each outlet opened in city part. domestic manifactures has done this investment when the land price were dirt cheap in 50s to 60s.

        2) English speaking labor are expensive compare to other developed countries.
        Each time Detroit sends non bilingual, English speaking only expats, they are hiring English speaking Yes men for themselves, typically graduated from 2nd tier MBA school with 70% base salary of investment banks, which they could’t get job at.

        If these expense are considered as longtime investment with short-term loss, prices can be a little lower or at least stable, but in many cases it seems to be taken into account as cost. which to be directly allocated to each cars transaction price of the time period.

  • avatar
    Spike_in_Brisbane

    I was waiting for someone to mention that all cars in Japan are RHD. How many American cars are exportable with steering wheels on the right? Not many. The Australian market was mentioned but the most popular Ford and GM cars here are made here. (Holden, Falcon, Cruze, Ranger). BMW and MB have a long history of building cars that work both ways. US built RHD cars are mostly limited to Chryslers and Jeeps. We cannot get Corvettes or Camaros (based on the Holden) without paying about $30,000 extra for conversion.
    By the way, this explains the prevalence of Jaguars and Rovers in Japan mentioned earlier.

    • 0 avatar
      ccode81

      I drive LHD Alfa in Tokyo.
      RHD is not mandatory

    • 0 avatar
      svenmeier

      Actually wealthy Japanese will PAY EXTRA to import a LHD European luxury car into Japan, even a British luxury car. It’s all about status and driving a LHD European premium car displays the message twice: I am rich (for driving a European luxury car) and I am filthy rich once again (for driving a LHD European luxury car).

      I was once told that some of these unique Japanese owners of European luxury cars will even go as far as to tan their left hand using tanning lotion or solar studios. This is to signify that they drive a LHD car.

      Also, many European luxury cars sold in Japan are not converted to RHD. Dealers know that the Japanese will pay a premium for them. It’s a weird curiosity.

  • avatar
    carbiz

    Interesting how the LHD/RHD barrier is mentioned in the context that it almost implies that Detroit somehow should be blamed for this, too.
    Think about the situation after WWII. With the Japanese economy in tatters (and you Americans getting to foot the bill to rebuild it – gee, I don’t see that factoring into Nissan or Toyopet’s ‘bail out’) would Ford or GM have bothered retooling factories and building RHD for an economy that had the perceived potential to sell a few hundred thousand vehicles per year?
    Sure, with the hindsight of 70 years, we can see now that perhaps GM or Ford should have tried a bit harder in the 1950s to sell over there, but the Japanese market was tiny. Combine that with the difficulties in adapting vehicles for RHD (at the time), who would bother?
    So, rather than seeing this as an oversight on the part of Detroit, perhaps this is one of those subtle barriers that Japan Inc chose to maintain to keep out the foreigners. After all, why didn’t China adopt right hand drive?

    • 0 avatar
      Pch101

      Interesting how the LHD/RHD barrier is mentioned in the context that it almost implies that Detroit somehow should be blamed for this, too.

      Detroit can be faulted for not engineering the cars to be easily converted, only to complain that they aren’t allowed to export them (to people who wouldn’t want them, anyway.) Do you expect the Japanese to drive cars that have steering wheels on the wrong side, just to please you?

    • 0 avatar
      Spike_in_Brisbane

      The tiny market for RHD vehicles consists of the following countries:
      Anguilla,Antigua and Barbuda, Australia, Bahamas, Bangladesh, Barbados, Bermuda, Bhutan, Bophuthatswana, Botswana, British Virgin Islands Brunei Cayman Islands Channel Islands Ciskei Cyprus Dominica Falkland Islands Fiji Grenada Guyana Hong Kong India Indonesia Ireland Jamaica Japan Kenya Lesotho Macau Malawi Malaysia Malta Mauritius Montserrat Mozambique Namibia Nepal New Zealand Pakistan Papua New Guinea St. Vincent and Grenadines Seychelles Sikkim Singapore Solomon Islands Somalia South Africa Sri Lanka St Kitts and Nevis St. Helena St. Lucia Surinam Swaziland Tanzania Thailand Tonga Trinidad and Tobago Uganda United Kingdom US Virgin slands Venda Zambia Zimbabwe

      I think you’ll find some sizeable markets there. (Japan, India, Indonesia for a start)

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