Japanese Invasion Strikes the Chinese Automotive Market

Lexus has revealed in an official statement that the only thing preventing them from manufacturing vehicles in China is the fear of manufacturing inferior quality products. Lexus, Toyota’s premium car brand, is quite obsessed with quality and is unwilling to make sacrifices in this department. Hence, Lexus imports all automotive parts from Japan, before assembling the final product for selling in China. This prevents prices from falling, although quality is ensured on all accounts.

Competition in the Japanese market is at its peak right now, although experts are hinting at a brighter future within the next decade. Most of its European competitors, such as BMW, Mercedes Benz, Audi etc, locally manufacture parts for sale. This reduces price and enhances appeal. Lexus, as a result, is facing stiff competition. The German trio, have a commanding position due to superior brand image, although their products may not necessarily be superior to what Lexus has on offer.

Company boss Tokuo Fukuichi had stressed the importance of quality over quantity at Shanghai last month, when annual sales reports were presented. Lexus managed to sell a fifth of what BMW did last year and one seventh of Audi’s annual sales. These figures may seem disappointing at this moment, but insiders are hopeful of steady progress soon.

China does not take Japanese products very kindly and hence demand for European vehicles are higher. People purchasing Lexus, are necessarily aware of quality concerns and inquisitive in nature. Lexus’ first plant outside of Japan was in Canada, one and a half decades back and they have established themselves as a global player, quite efficiently within this time. China happens to be their second largest market at this moment, which high chance of progress soon.

Nissan is another huge name in the Chinese automotive circuit, being the second largest Japanese player to enter fray. They have quite a few new offerings for China, along with a host of current generation vehicles that are not yet available in this part. The future sure looks bright, with new entrants including Honda too! They plan on manufacturing vehicles under their Acura nameplate, although we are not yet aware of what models they plan on bringing.

China could very soon see a Japanese invasion, at least in this field. Nissan has promised to manufacture their QX50 Cross over and Q50 sedan in China, which should pull down prices by a considerable margin. Competing against localized car makers is quite different, unless you manufacture products locally. Chinese vehicle demands will reach 2.7 Million units a year by 2020 and foreign car makers are desperately trying to cash in on this situation.

Lexus recently unveiled its NX Compact SUV, to compete with the likes of BMW’s X1 and Audi’s Q3 that are currently manufactured locally. Lexus sold a total of 70,400 vehicles in 2013 and they plan on increasing this figure quite a bit for this fiscal year. We will get back to you with details regarding the Chinese automotive industry. Stay tuned for more!

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