It was the worst of times for most car sales. It was the best of times for the smallest models.
Yes, this is a tale of two cit- ... uh, markets: Japan and Korea.
Faced with the worst recession in more than 30 years, consumers in both countries have turned to the smallest and least expensive cars available: minis. Sales of the under-1.0-liter cars and trucks have surged even as sales of other vehicles have slumped.
In 1998, total vehicle sales, including commercial vehicles, dropped 12.5 percent in Japan and 47.2 percent in Korea. Sales of minivehicles in Japan slipped a modest 4.1 percent. But in Korea, mini sales soared 80.9 percent over 1997, while non-mini sales plunged 65.6 percent.
Distinct mini segment
In both markets, the mini segment is distinct and defined by law.
Substantial tax and regulatory breaks favor minis, while the law mandates maximum body and engine sizes. In Japan, a mini's engine must be smaller than 660cc; in Korea, it must be smaller than 800cc.
Although minis are hot sellers in both markets, Japanese and Korean customers differ widely in what they want in the segment. That is more than a little obvious in the sharply distinct differences between the segment leaders in the two countries, the Suzuki Wagon R in Japan and Korea's Daewoo Matiz.
The Suzuki Wagon R, which toppled the Toyota Corolla from its 30-year perch as Japan's best-selling vehicle in 1998, is a boxy crossover vehicle, somewhere between a tall wagon and a microvan. In Korea, the Daewoo Matiz, which is outselling the rival Hyundai Atos nearly 3-to-1, is a fluid-looking car closer to a traditional sedan in styling.
Those sheet metal differences tell a great deal about the underlying disparities between Asia's two largest automotive markets.
'Japanese cars reflect a more
active lifestyle. That's why boxy styles are popular,' says Akira Fujimoto, chief editor of Japan's Car Styling magazine. 'It's not just the mini segment. Sedans are not selling that well in Japan. Instead, what's selling are sport-utility vehicles, minivans - all boxy styles.'
Suzuki deliberately broke with prevailing styling and went boxy when it designed the Wag-on R, which debuted in 1993.
During the so-called Bubble Economy years up to 1990, Japan was awash in sports cars and luxury sedans. But the collapse of the economy shattered Japan's sense of wealth and led many younger Japanese to question unflagging devotion to their companies and begin spending more time on their own leisure pursuits.
Suzuki's product planners decided to put practicality and ease of use at the top of their priority list. They also took aim at men. Until then, about two-thirds of the buyers of Suzuki's mainstay mini, the Alto, were women. Minis are considered ideal for housewives' supermarket runs. The Wagon R, though, was designed to be 'a mini that even men would use,' said Suzuki spokesman Shinichi Imaizumi.
Suzuki's designers pushed the exterior edges out as far as the regulations allowed. The boxy result maximized interior space for hauling sports gear and erased the cramped image that had dogged minis.
But nobody knew if the public would go for the odd body style. Assembly workers laughed at the Wagon R when it began rolling down the line, recalls a company spokesman.
Even President Osamu Suzuki wondered publicly whether the car would reach its sales target of 5,000 a month. He needn't have worried: The automaker has had to boost output every year since launch and is now building, and selling, almost 20,000 Wagon R models a month.
Men represented 60 percent of the initial Wagon R buyers. That has since dipped to around 50 percent but is still well above the norm.
It turned out the odd styling either appealed or didn't matter. That may be because about 78 percent of all mini buyers come from two-car households, so many Wagon R buyers have a more formal-looking sedan available if they need something traditional to drive to, say, a wedding. Moreover, the boxy body makes for easy entrance and egress, a strong selling point in Japan's rapidly aging society.
The social factors that propelled the Wagon R to success and spawned a flurry of imitators are not repeated in Korea, however.
'Dynamic, organic shapes are more common in Korea. Emotional styles appeal to Koreans,' Fujimoto says. 'Look at the front end of the Matiz, and you can tell right away. It has a strong organic look, not boxy.'
In Korea, female drivers are fewer, only about 25 percent of licensed drivers. Fewer Korean households have two vehicles; until recently, Korea piled extra taxes on multicar households.
Moreover, the key force behind the mini segment's surge was the lousy economy. Buyers were forced to move downmarket rather than choose a smaller vehicle to fit their lifestyle.
Korean buyers, therefore, prefer the Daewoo Matiz, which looks more like a traditional car than the Hyundai Atos.
'We're still very conservative as a people,' says Daewoo Motor Co. Managing Director Han Young-Chul.
Indeed, the Atos failed in part because Hyundai's product planners had projected that the Korean market would follow the Japanese lead toward minivans and away from sedans.
They positioned the Atos as a multipurpose vehicle and gave it a high roofline and squared-off back, partly to distinguish it from conventional four-door sedans such as the Daewoo Tico.
They were wrong.
With hindsight, admits Park Jong-Suh, Hyundai Motor Co. executive vice president in charge of the design center, he realizes that Koreans still prefer a traditional three-box design.
'It's because of the relatively recent motorization of Korea,' he says. 'Kore-ans want their car to look like a car.'
Korean car shoppers are more likely to be buying their family's first car ever. So they want a body style that conveys a sense of status and tradition, not funky practicality.
In contrast, young Japanese have grown up with a car and see it as an appliance. They are willing to consider the most suitable appliance that fits their needs and place little emphasis on issues of status.
Turning to India
Scrambling to control the damage, Hyundai has turned to its Indian venture for help.
Indian focus groups had rejected the Atos for many of the same reasons Korean buyers did. So for the Indian market, Hyundai lowered the roofline slightly and gave the car a softer look with rounded corners. It called the Atos derivative the Santro.
Now, Hyundai is importing Santro body panel stampings into Korea and using them on the Atos platform. It put the more sedanlike car, badged as a Kia Visto, on the market in late March.
The early numbers are encouraging. The Visto's sales of 4,500 in May made it Korea's sixth-best-selling car that month. If those sales numbers hold up, the Atos may show that with a few market-sensitive styling changes, a car's sales can go from the worst of times to the best of times.