By Liang Rui
"Where there is a way, there is a Toyota". The Chinese version of this ad phrase of Toyota is very well-known in China and it also reflects the glory of Japanese cars in the first decade of this century. However, things have changed. In the past two years, particularly in the past two to three months, Japanese cars have been having quite a tough time in the Chinese market.
Since the beginning of August when the "Diaoyu Islands incident" ignited consumers' resistance against Japanese products, sales of Japanese cars in some regions have plunged and never recovered. According to statistics, total sales of Japanese cars in August decreased by 2 percent compared with the same period of last year, and the year-on-year decrease of Toyota was as high as 15 percent; in October, the plummeting momentum was even stronger: a total of 98,900 Japanese cars were sold, down 38.22 percent month on month and 59.41 percent year on year, their total market shares dropping 12.43 percentage points compared with the same period of last year.
Facing the market that is slipping away from their hands rapidly, Japanese brands, including Toyota, Honda, Nissan, Mitsubishi, Mazda, Subaru, and Suzuki, made high-profile appearances in the 2012 Auto Guangzhou that started on November 22. They had not only maintained the exhibition volume equal to that of last year, but also employed all their skills to ingratiate themselves with Chinese consumers.
Hiroji Onishi, director of Toyota's business in China, said that "The more troubled the time is, the more we should love China. In the future, Toyota will base itself on the Chinese market to promote its business, change "Toyota China" to "China Toyota", and achieve localized reform that is rooted deeper in the Chinese market". Nissan played the compensation card, claiming that "within 7 days after the purchase, the consumer can change or return the purchased car if they are not satisfied with the quality, and any damage caused during the anti-Japanese demonstration can be fully compensated". Honda and Mitsubishi have also announced full-compensation plans.
Besides vigorous effort in marketing, Japanese cars have also been impressive in making investment. Honda announced that work of establishing a Honda design center in China was going on as scheduled, and 10 or more new models and upgraded models had been planned to be released by 2015. Toyota is planning to release 20 new models in the Chinese market in the coming 3 years. FAW-Toyota is planning to import a three-box sedan and GAC Toyota is planning to import a two-box sedan in the next half of 2013, and these two joint-venture companies will build joint-venture self-owned brands starting from next year. Besides, construction of the CVT gearbox factory in Changshu invested by Toyota has started and production is estimated to start in 2014.
However, can all these efforts really restore the market position of Japanese cars? The answer to the question remains uncertain.
From the perspective of joint-venture cooperation, Japanese car companies, inherently, do not fully trust their Chinese counterparts in their cooperation. At the beginning of the opening up and reform policy, the three major Japanese car companies were not enthusiastic in making investment in China. Only several small companies, including Daihatsu, Suzuki, and Isuzu, had conducted joint-venture cooperation in China, with major cooperation in China starting 10 years later than European and American car companies. Around 2000, big Japanese companies decided to accelerate investment in China, but they focused more on whole-vehicle operation and were not willing to bring the most advanced and most essential parts to China, keeping them in Japan or taking them to Thailand and other Southeast Asian countries. After the earthquake tsunami last year, the Japanese car industry still wouldn't want to transfer the production of its essential parts to China. The lacking of trust will surely cause discord in cooperation and delayed market response.
In terms of car model, the glory of Japanese cars has gone. One of the most important reasons why Japanese cars have been highly popular in China and dominated the semi-luxury car market for years is their advantage in price and fuel efficiency. However, with more intensified competition in the auto market, other auto brands have made a series of customized reforms targeting specifically at the Chinese market and made their products more suitable for the demands of Chinese consumers. Especially after the rise of Korean cars and self-owned brands cars, the competitive edge of Japanese brands has begun to fade away.
Emotionally also, Japanese cars do not have much appeal. Safety-wise, Chinese consumers have been having increasing doubt about Japanese cars. The reputation of Japanese auto brands is not as good as that of European and American brands. And the "Diaoyu Islands" dispute has made it worse. Chinese consumers' liking to Japanese cars has dropped significantly. Cold political ties will certainly result in cold economic ties. Before relations between the two countries are completely restored, it's hardly possible for Chinese consumers to completely change their attitude towards Japanese cars.
Although Japanese auto companies are optimistic about sales after the Chinese New Year, believing that the impact of the "Diaoyu Islands" can be cast away and that the "good old days" would return, the reporter believes, based on the above-mentioned reasons, that Japanese car companies are being rather wishful in believing that sales would improve significantly in the near future.
