TOKYO -- Luxury-car imports in Japan that compete with Lexus face a bright future.
Imports have slogged through 10 years of stagnant sales in Japan. Some carmakers have dismissed Japan as not worth the effort.
The premium segment in Japan amounts to fewer than 500,000 vehicles a year, according to DaimlerChrysler Japan Ltd. Only 7 percent of light vehicles sold in Japan cost more than 3.5 million yen, or about $31,338 at the current exchange rate. That is tiny compared with other developed nations' markets.
But the luxury segment in Japan is poised to grow because of social changes. Less clear is the impact of Japan's rapid aging.
Not all middle class
Until at least the mid-1980s, well over 80 percent of all Japanese identified themselves in surveys as middle class. They were right. Compared with the United States or Europe, Japan had a far narrower disparity between the richest and poorest.
That has changed. Over the past five years or so, Japan has embraced American-style capitalism, with winners and losers. The rich now are flaunting their wealth.
When the goal of the best and the brightest was to head trading house Mitsubishi Corp., they aspired to being chauffeured in a sedate Toyota Century or Nissan President.
Now, they want to found a Web startup, become wealthy and drive a Bentley or Ferrari. Both makes are enjoying record sales.
Ulf Nord, executive managing director of market research firm Global Insight in London, predicts that premium brands will grow 89.3 percent in Japan between 2005 and 2010. Volume brands will grow just 0.9 percent in that time, he says.
On the flip side are demographics. It's the young wealthy who are most likely to flaunt pricey cars. But Japan is old and getting older. The number of children born each year has declined for 25 straight years. Japan has almost no immigration.
Japan's older buyers want a small car that they feel they can control.
They are buying inexpensive minicars with 660cc engines. Minivehicles have surged from about a quarter of the market 15 years ago to a third last year and 35 percent through May of this year.
The Japanese car market is splintering. Minicars are hot. So are top-end expensive cars.
Truly distinct cars also sell well. Japanese individualists want something that stands out. That list includes the Hummer H2 and stylish Peugeots.
Except for practical minivans, everything else is struggling.
Lexus sales began in Japan at the end of August.
Some forecasters say Lexus sales will come at the expense of Mercedes and BMW.
I disagree. I believe Lexus will expand the luxury segment within an otherwise flat market.
By launching Lexus, Toyota is making it socially acceptable to spend more for a luxury car.
Remember when Deng Xiaoping told the Chinese that it was glorious to get rich? Now Toyota is telling the Japanese it is acceptable to act rich.
Lexus may steal sales from traditional Japanese upper-end sedans: the Toyota Crown and Mark X and the Nissan President. Those cars will slide into that stagnant middle of the market: not quite luxury, not cheap, not different.
BMW, Audi and other import brands that offer luxury and distinctiveness will grow.
You may e-mail James B. Treece at [email protected]