2015.10.05 06:15
Japanese Luxury Cars: The Limits To Infiniti
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Valentin Flauraud/ReutersA Infinity Emerg-E Concept car is displayed on the car maker's booth during the first media day of the Geneva Auto Show at the Palexpo in Geneva.A month before launching Lexus in America in 1989, Toyota considered running a television advertisement showing German aristocrats at a wild party in a hilltop castle. The voice-over intoned that the Teutons had dominated upmarket, high-performance cars for nearly 60 years but they had only "30 days left to enjoy it".
The ad never made it to the TV screens, which is just as well: three German brands, Mercedes, BMW and Volkswagen's Audi, have become ever more dominant as emerging-markets growth has expanded global demand for premium cars.
Lexus, Acura and Infiniti, the upmarket brands dreamed up in the 1980s by Japan's big three carmakers, Toyota, Honda and Nissan, have been left trailing (see chart). Together the German trio now have 70% of the market for fast, expensive and luxurious cars, whereas the Japanese have just 10%. And they are being overtaken by Jaguar Land Rover (JLR), a British (but Indian-owned) firm, which last year sold almost half a million cars, just behind Lexus.
The Japanese three are making renewed efforts to close the gap on the Germans. Last month Infiniti said it was redesigning its cars, starting with the new Q50 (pictured), to give them a more "passionate" Latin feel, distinguishing them from the "cold and clinical" German models. Lexus is about to launch a baby SUV, the NX, to rival JLR's successful Range Rover Racing Rivals hack ios Evoque and similar cars from Audi and BMW. Acura is pinning its hopes on the new RLX, a sleek, stretchy saloon.
For Toyota, Honda and Nissan, their premium divisions are, or at least should be, far more than just nice little sidelines. Profits in the fiercely competitive mass market can be vanishingly small, whereas those on upmarket models can be thousands of dollars per vehicle. So any improvement in the carmakers' sales of premium models would have a disproportionate effect on their overall results. As Andy Palmer, a Nissan executive, puts it, premium models account Racing Rivals hack apk for "12% of the volume and 50% of the profits" of the entire car industry.
At first the Japanese carmakers' premium marques were aimed mainly at the American market, and got off to a good start. Their mass-market brands had given anything Japanese-made a reputation for reliability. The new, premium models were technically advanced compared with Lincolns and Cadillacs, Detroit's upmarket offerings, and cheaper than their German rivals. By 2000 Lexus was the best-selling luxury-car brand in America, a position it held for more than a decade.
However, tarting up mainstream models with a bit of wood and leather may have impressed American motorists, who care more about value than styling, but it did not impress image-conscious European buyers. Acura, perhaps sensing the futility of the task, avoided Europe altogether. Since their premium brands had failed to go global, the Japanese carmakers were reluctant to give them the resources to keep up with the competition.
Lexus's initial success in America spurred the Germans to fight back hard, spending heavily on designing vehicles whose technical brilliance opened motorists' wallets, and on broadening their ranges to fill every possible niche. As the German brands successfully exploited rising demand for smaller premium cars, the Japanese were unable to keep up. Lexus and Infiniti make just a handful of models and Acura fewer still. BMW, Audi and Mercedes have dozens, and are launching new ones with bewildering rapidity. Mercedes is bringing out roughly one new model each quarter until 2020.
via The Economist
Instead of drawing the lesson that they need to give higher priority to building their premium brands, the Japanese car giants have generally treated them as afterthoughts, their bosses devoting more attention to the mass-market models they are most comfortable making and selling. At one point Carlos Ghosn, Nissan's boss, considered scrapping Infiniti altogether.
The lack of focus on premium marques has left the Japanese carmakers struggling in China, soon to be the biggest market for luxury cars. The German upmarket brands have done a wonderful job of persuading China's new rich that riding around in one of their models is the best way to say: "I have arrived." BMW now makes 30% of its profits in China.
Given the political tensions between the two countries, the Japanese marques start off with a handicap. Moreover, as Toyota's boss, Akio Toyoda, recently conceded for his own Lexus models, Japanese premium cars have "no heritage, no narrative"--and it turns out that well-off Chinese motorists care about this as much as Europeans do. JLR's brands have heaps of heritage, especially Range Rover and its association with British royalty. Last year JLR overtook Lexus as the fourth-largest prestige car brand in China.
Unlike their European rivals, the three Japanese car giants have done little to tailor their premium model range to Chinese tastes. And, although Infiniti and Acura plan to do so, none currently assembles its cars in China. So they incur import tariffs of 25% that German firms, with their thriving joint ventures with Chinese makers, do not have to pay. And as Lin Huaibin at IHS Automotive, a research firm, points out, Audi has 350 dealerships in mainland China, whereas Lexus has only 120.
More Passion, More Freedom
Head offices are belatedly getting into gear. Mr Toyoda is taking personal responsibility for Lexus, acknowledging that, like Infiniti, its cars need more "passion" in their styling. Nissan is giving Infiniti more independence, in the same way as VW gives Audi a free hand. (Not coincidentally, it provides almost half of VW's profits.) Infiniti's head office has been moved from Japan to Hong Kong and a former Audi man has been brought in as boss to polish up the brand. Infiniti has just opened design studios in London, San Diego and Beijing.
These efforts may help the Japanese premium marques, in time. But they come as the market is getting more crowded. Kia and Hyundai of South Korea are bringing out attractively priced upmarket models. Alfa Romeo and Maserati of Italy are making a comeback. And mass-market car firms, from Ford to Peugeot, are trying to "premiumise" parts of their range to boost profits. To compete properly all three Japanese brands need years of heavy investment and attention from above. Lexus has the critical mass of sales, and the promising new models, to keep it in the race. The future for Acura and Infiniti seems far less assured. In this business the Germans always seem to be moving a little bit faster.
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Read the original article on The Economist. Copyright 2014. Follow The Economist on Twitter.
If you loved this article and you would certainly like to obtain more information relating to Racing Rivals hack kindly see our own web page.
The ad never made it to the TV screens, which is just as well: three German brands, Mercedes, BMW and Volkswagen's Audi, have become ever more dominant as emerging-markets growth has expanded global demand for premium cars.
Lexus, Acura and Infiniti, the upmarket brands dreamed up in the 1980s by Japan's big three carmakers, Toyota, Honda and Nissan, have been left trailing (see chart). Together the German trio now have 70% of the market for fast, expensive and luxurious cars, whereas the Japanese have just 10%. And they are being overtaken by Jaguar Land Rover (JLR), a British (but Indian-owned) firm, which last year sold almost half a million cars, just behind Lexus.
The Japanese three are making renewed efforts to close the gap on the Germans. Last month Infiniti said it was redesigning its cars, starting with the new Q50 (pictured), to give them a more "passionate" Latin feel, distinguishing them from the "cold and clinical" German models. Lexus is about to launch a baby SUV, the NX, to rival JLR's successful Range Rover Racing Rivals hack ios Evoque and similar cars from Audi and BMW. Acura is pinning its hopes on the new RLX, a sleek, stretchy saloon.
For Toyota, Honda and Nissan, their premium divisions are, or at least should be, far more than just nice little sidelines. Profits in the fiercely competitive mass market can be vanishingly small, whereas those on upmarket models can be thousands of dollars per vehicle. So any improvement in the carmakers' sales of premium models would have a disproportionate effect on their overall results. As Andy Palmer, a Nissan executive, puts it, premium models account Racing Rivals hack apk for "12% of the volume and 50% of the profits" of the entire car industry.
At first the Japanese carmakers' premium marques were aimed mainly at the American market, and got off to a good start. Their mass-market brands had given anything Japanese-made a reputation for reliability. The new, premium models were technically advanced compared with Lincolns and Cadillacs, Detroit's upmarket offerings, and cheaper than their German rivals. By 2000 Lexus was the best-selling luxury-car brand in America, a position it held for more than a decade.
However, tarting up mainstream models with a bit of wood and leather may have impressed American motorists, who care more about value than styling, but it did not impress image-conscious European buyers. Acura, perhaps sensing the futility of the task, avoided Europe altogether. Since their premium brands had failed to go global, the Japanese carmakers were reluctant to give them the resources to keep up with the competition.
Lexus's initial success in America spurred the Germans to fight back hard, spending heavily on designing vehicles whose technical brilliance opened motorists' wallets, and on broadening their ranges to fill every possible niche. As the German brands successfully exploited rising demand for smaller premium cars, the Japanese were unable to keep up. Lexus and Infiniti make just a handful of models and Acura fewer still. BMW, Audi and Mercedes have dozens, and are launching new ones with bewildering rapidity. Mercedes is bringing out roughly one new model each quarter until 2020.
via The Economist
Instead of drawing the lesson that they need to give higher priority to building their premium brands, the Japanese car giants have generally treated them as afterthoughts, their bosses devoting more attention to the mass-market models they are most comfortable making and selling. At one point Carlos Ghosn, Nissan's boss, considered scrapping Infiniti altogether.
The lack of focus on premium marques has left the Japanese carmakers struggling in China, soon to be the biggest market for luxury cars. The German upmarket brands have done a wonderful job of persuading China's new rich that riding around in one of their models is the best way to say: "I have arrived." BMW now makes 30% of its profits in China.
Given the political tensions between the two countries, the Japanese marques start off with a handicap. Moreover, as Toyota's boss, Akio Toyoda, recently conceded for his own Lexus models, Japanese premium cars have "no heritage, no narrative"--and it turns out that well-off Chinese motorists care about this as much as Europeans do. JLR's brands have heaps of heritage, especially Range Rover and its association with British royalty. Last year JLR overtook Lexus as the fourth-largest prestige car brand in China.
Unlike their European rivals, the three Japanese car giants have done little to tailor their premium model range to Chinese tastes. And, although Infiniti and Acura plan to do so, none currently assembles its cars in China. So they incur import tariffs of 25% that German firms, with their thriving joint ventures with Chinese makers, do not have to pay. And as Lin Huaibin at IHS Automotive, a research firm, points out, Audi has 350 dealerships in mainland China, whereas Lexus has only 120.
More Passion, More Freedom
Head offices are belatedly getting into gear. Mr Toyoda is taking personal responsibility for Lexus, acknowledging that, like Infiniti, its cars need more "passion" in their styling. Nissan is giving Infiniti more independence, in the same way as VW gives Audi a free hand. (Not coincidentally, it provides almost half of VW's profits.) Infiniti's head office has been moved from Japan to Hong Kong and a former Audi man has been brought in as boss to polish up the brand. Infiniti has just opened design studios in London, San Diego and Beijing.
These efforts may help the Japanese premium marques, in time. But they come as the market is getting more crowded. Kia and Hyundai of South Korea are bringing out attractively priced upmarket models. Alfa Romeo and Maserati of Italy are making a comeback. And mass-market car firms, from Ford to Peugeot, are trying to "premiumise" parts of their range to boost profits. To compete properly all three Japanese brands need years of heavy investment and attention from above. Lexus has the critical mass of sales, and the promising new models, to keep it in the race. The future for Acura and Infiniti seems far less assured. In this business the Germans always seem to be moving a little bit faster.
Click here to subscribe to The Economist
Read the original article on The Economist. Copyright 2014. Follow The Economist on Twitter.If you loved this article and you would certainly like to obtain more information relating to Racing Rivals hack kindly see our own web page.