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Japan Time 15:17 14 Dec 2017
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The limits to Infiniti, Japanese Luxury Cars 09-07-2014

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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 Volkswagens 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 Japans 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 JLRs successful Range Rover 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 for 12% of the volume and 50% of the profits of the entire car industry.
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