Japanese sticks to un-domestic strategy

Affected by the economic downturn and increasing consumption tax, which is aiming to the automotives with over 3.0 L displacements since last year's September, the market of luxury cars has been suffered severe hit. Since the third quarter this year, the domestic luxury automobile market has already presented clearly reviving signs. From January to August in 2009, the sales volume of luxury vehicles in China has increased 20% comparing with the same period of last year.

Daily Economic News reported, in the fast-growing market of luxury automobiles in China, except for Mercedes-Benz,, BMW and Audi these three brands has continued their steady growth, which has already taken up more than 80% of the market, the Japanese cars has also entered this competition as new-rising force.

Except Lexus (formerly known as Lingzhi), which is the veteran Japanese brand of luxury automobile, Acura and Infiniti entered the Chinese market rather late, but are still able to take a firm stand in Chinese market depending on their unique products and brand characters as well as high quality service.

Senior brand expert Gu Huanyu thinks, for the disadvantaged brands and the brands which enter the particular market in very short time, it's usually to use the strategy of the differentiation in product, brand and marketing to avoid going head to head with dominant brands, in order to win the place in the market.

　　Differentiation seeks for market

Under the influence of the financial crisis, the Japanese brands of luxury vehicles have different kinds of declines in the market of north American, who were used to consider American market as their main sale focus. On the other hand, China's market of luxury vehicles with huge potential has become the target of the competition among Japanese luxury brands.

In Chinese automobile market, the strength of German brands of luxury cars has brought on tremendous pressures on Japanese luxury cars. It is reported that comparing with same period of last year, Mercedes-Benz has reached the growth rate of 44% of the sale in Chinese market between January and September, which has sold out 46600 units. The sale of Audi has rose 37% to 15000 in September, which has achieved a new sale record in the single month. The total amount of sold Audi vehicles is 108,859 with the growth rate of 20% from January to September. BMW reached the sale of 8131 units in September, which has increased 35% compared with last year. The brand MINI, belonged to BMW, has sold 503 units in China, an increase of 37%. Volvo, the luxury automobiles brand also from European, has grown 47% from January to September.

The executives of luxury vehicles in Japan know very clearly, it is not quite wise to choose compete head to head against same series of German brands, under the situation that Germany luxury brands have already taken possession of the majority share of the Chinese market. In order to earn their place in the luxury automobile's market, there are mainly two ways to go with. One is to expand their product lines, and to work on setting up distribution channels. The other is to build up brand image through emphasis on individual characteristics of products and brands.

To construct the distribution channel, "There are 70 approved stores of automobile 4S. By the end of this year, it is expected that 60 stores will be open. All the seventy stores will be fully open and in business in 2010." Zeng Lintang, deputy general manager of Lexus China, introduced that it will increase and strengthen greatly the ability of competition in the aspects of sale and service network.

Yasuaki Hashimoto, the general manager of Nissan China also disclosed to reporter, Infiniti has currently 14 automobile 4S stores. The number will be increased to 17 by the end of the year, and will be reached to 30 or so in the next two or three years.

It's the weakness also for Acura to build up distribution channels. Recently, there has been reported that Honda will increase the number of authorized retail stores of Acura located in China from 20 at present to 35 by the end of 2009. The main focus is the markets in Beijing and Pearl River Delta region, which hopes to make the achievements of satisfactory increase of the amount of sales, the satisfaction of customers and also the product lines.

Considering the brand image, some analysts point out, that Acura and Lexus have already make their brand orientation, which is "Sport + Luxury". And Infiniti has combined sport, luxury and art very delicately, and established an unique brand image. But the Japanese luxury automobiles are still confronted with the most important test, if they could boost up the brand identity and the sense of trust as quickly as possible

"The German luxury vehicles are known for their mechanical technology and excellent product's quality. On the other hand, the luxury autos from Japan have their advantages of electronic technology, unique branding connotation and artistic products. For the Chinese market, which is strongly embracing, the Japanese luxury automobiles should be able to take their place depending on different product's characteristics and marketing strategies." One analyst from Northeast Securities told the reporter.

　　Stick to the un-domestic strategy

Thanks to excellent product quality and accumulated brand, Mercedes-Benz, BMW and Audi, three major German brands of luxury automobiles, are still dominant in Chinese market. The localization strategy helps these German luxury auto brands to occupy further market shares of China's market. In the first half of this year, Audi sold out total 66131 units in China with an increase of 10.4%, which takes 42% of market share in high-end autos, while BMW and Mercedes-Benz take respectively 23% and 17%. Meanwhile, these three brands are all candidates on the lists of government procurement, which makes other brands of luxury automobiles extremely envy.

But the reporter finds out, despite of the success of German competitors, the Japanese brands of luxury automobiles do not follow up the localization's strategy. From the standpoint of top management, it is far more important to keep on high-end path in order to establish the brand image than only unilateral pursuit for sales volume.

"At this stage, localization of Infiniti is not considered in the range of our plans." Yasuaki Hashimoto told the reporter from Daily Economic News, only when the profitability of products, quality assurance and brand influence are mature enough, it would be taken into actual consideration to produce Infiniti's automobiles in China.

When Spirior of Dongfeng Honda came into the market in China, the automobile industry regarded once Spirior as the auto models of domestic Acura. But this point of view was immediately denied by Honda China. "The Dongfeng Honda's new cars are only produced with Acura in the same platform. There is fundamental difference between both models." The head of Acura Division in Honda Motor (China) Investment Corporation Limited explained to the media, Acura will continue to adopt the sale strategy in form of import in order to maintain the high-end market.

Lexus, which entered Chinese market rather earlier, avoids also talking about the topic of localization. In the 1990s, the luxury automobile's brand Lingzhi of Toyota came into the Chinese market. In 2004, it was changed from Lingzhi to Lexus and went back into the market in China. Lexus has considered the localization in China. But due to the reality of slowly sale increase, Lexus has no choice but to lay their localization process on the table. "Lexus introduces low-emission vehicles responding to the market's competition, but there are not currently plans to produce domestic vehicles in China.” Zeng Lintang told the reporter from Daily Economic News during the interview.

　　Avoid the executive models of luxury vehicles

Since entering the Chinese market, Audi's brand image of "official car" is deeply rooted in people's mind. Thanks to being listed in the government procurement over the years, Audi has earned the market and popularity. "Audi has been the official Chinese business vehicles at all time. We are very proud of that, although we do wish to sale our products to all levels of customers." said the general manager of FAW-Volkswagen Audi Division Tang Mai.

China-made Mercedes-Benz and BMW are selected candidates of the list of government procurement this year. This also established the dominating position of German automobiles in the market of executive luxury automobiles. This kind of business models of luxury vehicles are exactly the weakness of Japanese luxury vehicles, which is pursuing performance, artistic and comfort products. Therefore, Lexus, Infiniti and Acura all take the evasive strategy for the market of executive luxury vehicles.

"Infiniti has only very short time to enter the Chinese market. It is more difficult for Inifiniti to participate the competition in the high-end business car market." Yasuaki Hashimoto admitted that Infiniti, which is always focusing on arts-oriented products, is not good at the competition in the field of high-end executive automobile.

"It makes sense that BMW and Mercedes-Benz make on the list of government procurement. Because Lexus is imported vehicle, price and emission and other reasons have been limited." Zeng Lintang told the reporter with frustration that he hoped government procurement could lower the standards, so the imported brands like Lexus can also be given the same opportunities. Zeng Lintang admitted frankly, Lexus doesn't have the edge in the high-end luxury automobiles market comparing with Benz, BMW and Audi.

For Acura, the extremely urgent mission is to build up the Acura's high-end brand image as soon as possible. To pursue unilateral sales volume is not worth. It's not wise choice to go head to head with German luxury brands in the market of executive head-end automobiles.(Jianfei Keke)

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