Marketing of foreign cars in Japan test of salesmanship

Press, 9 May 1984, Page 36

Marketing of foreign cars in Japan test of salesmanship

By

KEITH STAFFORD,

in Tokyo

When it comes to selling, probably there is no more daunting task than trying to market foreign cars to the Japanese. Many have tried. Few have succeeded. The bare statistics tell the tale simply. In the financial year ending last March Japan made seven million cars, exported 3.7 million and sold 3.3 million at home. Foreign car companies were lucky to put a mere 40,000 of their models on to Japan’s roads, a miniscule one per cent of the total Japanese car market. So someone with the idea of bringing cars to Japan with a minimum price tag of four million yen ($NZ26,000) to offer alongside the one million yen (SNZ6SOO) Toyota Corolla, Japan’s most popular car, must be an optomist. That someone is Luder Paysen, a former Frankfurt accountant, and now managing director for the Japanese arm of West Germany’s Munich-based BMW — Bayerische Motoren Werke. In the three years Paysen has been helping to build BMW Japan Corporation, its sales have doubled to some 6000 a year and he hopes for 7400 Japanese BMW registrations this year, even though the size of the imported car market has been shrinking. At the end of the 1970 s the Japanese were buying some 45,000 imported cars a year, with the United States having the single largest share. But American cars were cast aside because of their appetite for petrol in a country which imports virtually all its oil. Registrations of United States cars have now dropped to about 2500 a year from a peak 11,000, and West, German car companies have almost taken over the imported car field. Mercedes Benz, Volkswagen, Audi, Porsche, and

BMW supplied 75 per cent of the foreign cars registered in calendar 1983, with Volkswagen selling the most at about 10,000. That still contrasts markedly with the 207,000 Toyota Corollas the Japanese bought during the year. But Paysen reckons it is worth taking on the Japanese car industry giants. “We have embarked on a long-term project,” he told Reuters. “BMW is committed to this market. We really want to develop it, and we are looking for good long-term profits.” BMW is attracted by the population structure of a Japan which is evolving from the industrial base it built in the last three decades towards a service industry economy. Market research suggests that a whole generation of young people in their early 20s will have plenty of money to spend in 10 years time, and will be searching for status symbols which will underline their successes. In the past, one of those symbols has often been a well-styled foreign car which sets the driver apart from the man driving a home-grown model. Rich Japanese are attracted to foreign cars because they are different, luxurious, and fast. Most West German car companies’ advertising themes concentrate on European character as much as possible, and happily develop the idea that they are expensive cars only the rich can drive. “We are not looking for the mass market,” Walter Sawallisch, BMW’s marketing director in Japan, said. “We are aiming at a small group of Japanese and with this approach in Japan you have to invest a lot of money on advertising, far more than BMW has had to do in other markets.” At the launching of the BMW in Japan last

month potential buyers gathered over cocktails at a central Tokyo hotel to see a slide show packed with high technology graphics, spacetheme music and symbols of success. The new cars emerged on to the ballroom floor from a cloud of smoke in pitch darkness, then blinded the audience with full beam headlights. “We sold cars there and then,” a happy Sawallisch said. And the men selling them were Japanese. For one of BMW’s aims in Japan has been to build a company staffed by Japanese and not Germans, taking youngsters fresh from school and university to form the backbone of the Japanese company. The BMW Japan president is Yoji Hamawaki, 54, former president of the United States subsidiary of Kawasaki Heavy Industries, one of Japan’s main motorcycle manufacturers. “It will take years to bring these recruits to the management level, so the Germans are supporting us at the preliminary stage,” he explained. “Right now the number of employees is 275 and we are investing 1.5 billion yen (SNZ9 million) on a training school and national parts distribution centre.” It is a long-term plan, Paysen says. “We are making a profit, but we don’t have the same rate of profitability yet as BMW does in other markets,” he says. “Still, our operations are not geared for making a short-term profit but to develop the market for the future.” Could there be a day when BMW really takes on the Japanese in their home territory by building a car plant in Japan? BMW does not think so. It sees little economic sense in any foreign plpnt which does not churn <&t at least 1000 cars a day.W