SDNR

Foreign carmakers cash in as the rich get richer

By KANAKO TAKAHARA
japantimes.co.jp

One Sunday in June, a man in his 30s visited the spacious BMW showroom in Tokyo's Shinjuku Ward.

Akio Iio, manager of BMW Tokyo Corp.'s Shinjuku dealership, waited on the first-time customer, showing off the gleaming German luxury and performance cars.

To Iio's surprise, the man not only said he wanted to buy a two-door 650i convertible worth 11 million yen, but promised to pay in cash.

Iio called on the customer, president of an IT company, to collect the money a few days later, and the man paid him in one lump sum.

In recent years, there has been a great deal of talk in the media about the growing gap between rich and poor in Japan. And while the phenomenon, if real, poses headaches for policymakers, manufacturers of luxury cars are turning a handsome profit as the rich get richer.

Auto sales have remained flat at around 6 million units per year since 1998, but expensive imports are grabbing a larger slice of the pie.

According to the Japan Automobile Importers Association, the number of newly registered imports priced at more than 10 million yen nearly tripled from 3,868 in 1998 to 10,937 in 2005.

Cornes & Co., which imports such high-end makes as Maserati, Bentley, Ferrari and Rolls-Royce, illustrates the trend.

In fiscal 2005, Cornes sold 426 British-made Bentleys, up from a mere 43 in 1999. During the same period, it saw its sales of Maserati cars nearly double from 211 to 397.

Kazuhisa Ichinose, director of Cornes' sales and customer service division, said changing lifestyles over the last five years among its core middle-aged and older customers has given a boost to sales.

"Traditionally, people in those age groups would leave an inheritance to their children," Ichinose said. "But now, they are more inclined to use it to enjoy the remaining years of their lives."

"Choi-waru oyaji," or "stylish old guys," are more common these days due in part to the popularity of Leon, a monthly fashion magazine aimed at well-off middle-aged men who aren't afraid to splurge on themselves.

Luxury car importers point out that Toyota Motor Corp.'s introduction of its Lexus models in Japan last August helped expand the market for import makes, too.

Toyota hoped the Lexus, which was already selling well overseas, would lure buyers away from rivals BMW and Mercedes-Benz. Lexus models start at about 3.9 million yen.

But Toyota has had a tough time getting a foothold in the segment, selling 10,300 of the cars by the end of 2005, just over half its sales target of 20,000.

Luxury imports, on the other hand, are enjoying strong sales as potential Lexus buyers check out what the foreign automakers have to offer.

"Customers who were only interested in domestic cars began to consider import cars that are in the same price category as the Lexus," said Naoto Domeki, spokesman for DaimlerChrysler Japan Co., which makes Mercedes-Benz cars.

BMW Japan Corp. spokeswoman Ryoko Shimizu said BMW's sales are up 20 percent and the number of people visiting its showrooms have risen by 25 percent since Lexus models went on sale in Japan.

"Potential Lexus customers seem to be visiting our showrooms and some of them have purchased our vehicles," she said.

Industry watchers say the Lexus debut in Japan is part of a worldwide trend by carmakers to develop premium brands to capitalize on stronger-than-expected demand for luxury cars.

DaimlerChrysler revived the Maybach, a well-known model in the early 20th century that disappeared after World War II, in 2002. The new Maybach can cost 44 million yen or more.

Consolidation among automakers in the late 1990s has also allowed them to devote more capital to developing new high-quality models, according to Tetsuya Kato, editor in chief of Car Graphic, a monthly magazine that often features import and luxury cars.

The decision by Volkswagen AG Chairman Ferdinand Piech to acquire the Bentley and Bugatti makes in 1998 is an example of this trend, Kato said.

People like Mr. Piech, who knew the true value of the companies modernized their models. Potential customers who yearned for the brands but had been dissatisfied with their quality jumped (at the revived makes)," Kato said.


Owners of Maseratis and Ferraris put their cars through their paces at the Fuji Speedway racetrack here during Cornes Festival 2006, an event sponsored by the auto importer of the same name in June. PHOTO COURTESY OF CORNES and CO.

cawimmer430

Very interesting article, Roberto. I'm going to post this on some forums where there are a bunch of....oh....LEXUS TROLLS.

Mr. M

Ironic isn't it. The Japanese aren't buying the Japanese cars but the Americans buy most of it. I would have imagined that the Japanese would be very loyal to their own makes. But as far as I know, they really go for German cars... Sales of the S-Class in Japan makes it the undisputed leader, as far as I know.

Good article. Japan's ageing population is a good reason why demand for luxury cars is rising. The vast number of Japanese who had worked for their wealth are now using it.

SDNR

It's curious how the introduction of Lexus in the Japanese market actually stimulated demand for foreign imports.

Here is the link for the original article Christian

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SDNR

Obviously things are changing a great deal in Japan ..that traditional unrelenting patriotism and loyalty to locally made-products seems to be waning ...especially among people with healthy bank balances.

YoUhimhER

what the article say is very true. around my school in tokyo, i see a lot of mercedes, bmw and even bentley and rolls royce, while lexus, i see them as often as audi (which is pretty sad for audi).
from my experience, japanese have this craving for foreign things, the young ppl love american music, female love french fashion items. almost every girl in my school has a lv bag.

cawimmer430

I guess the Japanese are just as brand conscious as other markets.

888

All I can say on this that I saw many nasty cars when I was in Tokyo last summer, mostly tuned benz Brabus/Lorinsers, maybach's , bentley's.......and each car have special rims 20/21 inches....as they roads are like carpets so its understandable

Snake Vargas

Yeah, the Japanese do love foreign things, both now and also in the past several decades.

I was almost going to say that almost no country likes the domestic brands, but I think it's more accurate to say that I think that many people see European cars as the state of the art - like it or not, and whether it's the reality or not.

Anyhow, ironically, just about every other Asian country has an affinity for Japan, following its trends and such; though Korea is coming into its own now.

SDNR

Other Asian countries do see Japan as a kind of exemplary model to emulate I guess ..although there is still some strong underlying resentment about WW2 of course.