Will the Japanese brands leave Europe?
For Japanese carmakers, the mature European market is surely not the most important. As it is also very competitive and difficult because of stringent regulations, more and more Japanese brands are thinking of abandoning the fight in Europe.
A while ago, the Japanese car manufacturer Mitsubishi announced that it is freezing its investments in Europe and will not launch new models anymore on the old continent. Other Japanese brands are reconsidering their situation here.
Daihatsu already left quite a few years ago. Honda is putting an end to its production in Europe by closing its Swindon factory in the UK. It has reconfirmed this last week. Nissan is closing its Barcelona plant and reconsidering its options as a ‘follower’ (in the new Alliance strategy) in Europe.
“In Europe, the market is saturated and relatively rich,” comments Paul Niewenhuis of the Center for Automotive Industry research in Cardiff in the Dutch newspaper Trouw. “More people tend to buy premium, but we see that the luxury daughters of the Japanese brands don’t work well here.”
Infiniti (Nissan’s premium daughter) is already gone in Europe, but also Lexus (Toyota Group) is by far not doing as well as in the States. Honda has even never tried to introduce its luxury brand Acura on the European market, and Mazda’s try (Xedos) is already gone for a long time all over the world.
Compared to former sales figures, practically all Japanese brands are performing worse. In Belgium, Toyota has even been the market leader for one year at the beginning of the eighties; in the Netherlands, Japanese brands were at their top in the early nineties.
For some of them (Honda, Subaru), sales figures are almost ten times less than in those glory years, Nissan sells only 40% from the 1991 figures, and so on. Mazda is recovering a little, in 2019, it sold 11 000 cars in the Netherlands, but that is still a mere 38% of the sales in 1991.
Toyota stays the exception, it has even increased its market share in the Netherlands from 4,8% in 2016 to 6,1% last year. The popularity of its hybrid models has certainly an influence on this.
One of the big frustrations of all Japanese manufacturers in Europe is the success of the South Korean brands. Hyundai and Kia have become really important in this market. “Many buyers who bought traditionally Japanese, think the Koreans at the moment make cars that are as good as those for a lower price,” comments Nieuwenhuis.
Many analysts think that there are too many brands on the market (and manufacturers are still trying to launch new ones). So, some will disappear, on one or more continents or totally. Remember Lancia, an iconic name, but only still sold in home country Italy.
That’s why more and more manufacturers are refocusing on the markets where they are the most popular. Talking about the Japanese, only a giant like Toyota can still afford to be present everywhere in the world.
That’s why fusions or Alliances become more popular again. Developing cars and adapting them to ever more stringent regulations costs a lot of money. If you can share these costs and launch technically similar cars under different brands (where they are the most popular), you have more chances to survive.
For the so-called generalist brands, difficult years will follow. And not everybody can make premium cars with a more healthy profit margin. For the bigger volume brands and even for the low-cost manufacturers, this is really becoming a Catch 22 situation. In the future, we will have fewer models and brands. It’s inevitable.