Japan and Germany -- the world's third and fourth largest economies -- might feel besieged by the rise of China and the "America First" policies of U.S. President Donald Trump. Not least in autos, where Beijing is pouring government funds into electric vehicles, the industry's new frontier, while Washington is mulling import tariffs.
Japanese and German groups, with similar traditions in quality, marketing and top-class engineering, face many common challenges. One way they can respond is by cooperation -- and why not start by pooling forces at their biggest showpiece events -- the Tokyo and Frankfurt motor shows.
Instead of fighting each other at a time of dwindling demand for these expensively glossy events, they should stage joint shows in Germany and Japan in alternating years and promote them jointly. It might make only a modest contribution to carving out a new future but it would generate excitement -- which is half the battle in selling upmarket autos, as any salesman knows.
Japan and Germany face similar questions. In both countries, the auto sector dwarfs all others in terms of revenue, employment and exports. Yet developments in digitalization, big data and artificial intelligence are transforming the industry. Old skills in combustion engines and drive trains risk becoming less important than new technologies, where the established makers do not necessarily have a competitive lead.
U.S. and Chinese rivals possess substantial technological and financial advantages that threaten to turn Japan and Germany into laggards. The success of the Japanese and German economies depends on whether their carmakers can keep pace with megatrends such as digitally-networked societies, urbanization and new forms of mobility.
Japan and Germany are still the world's industry leaders, accounting for nearly half of global vehicle production. But their dominance is under threat not only from established rivals but newcomers such as Tesla, Google and Apple in the U.S. and BYD, Geely and Tencent in China. China is not only the world's largest automotive market, it also by far the biggest in electric vehicles.
Figures from A.T. Kearney highlight the competition between the old and new. The average German automotive company is 134 years old and Japanese group is 84. In the U.S., the figure is just 27 because the likes of Ford, General Motors and Chrysler are far outnumbered by startups. In China, the average corporate age is 20.
Japanese and German automakers must help lead the transition to a connected, automated mobility society or else they risk being made obsolete by this once-in-a-century shift. The age of owners proudly polishing a car they would share with nobody may be giving way to pooled transportation. Faced with all the uncertainty that this implies, and the growing competition Japanese and German carmakers need to cooperate, or at least exchange notes on an intensive basis.
One place they can start is with their auto shows.
The International Motor Show Germany (known by its German acronym IAA) in Frankfurt and the Tokyo Motor Show traditionally serve as core platforms for shaping the automotive industry's future. They were among the top three international auto shows, along with Detroit.
But these events are losing their luster and importance. Visitors to the Tokyo Motor Show have plunged from a peak of 2 million in 1991 to 771,000 in 2017. The trend is the same everywhere around the world, except for the highly-successful newcomer auto shows in Beijing and Shanghai.
"If the Tokyo Motor Show does not change itself, it will eventually die," motor journalist Naoto Ikewatari has said. Hiroto Saikawa, chief executive of Nissan Motor and ex-chairman of the Japan Automobile Manufacturers' Association, acknowledged this last year when he said that he wanted the Tokyo Motor Show to be as popular and successful as the Consumer Electronics Show in Las Vegas.
The Tokyo Motor Show can recover its prestige by staging a single cooperative event with the IAA show by swapping cities each year. The combined event would make strategic sense in positioning the Japanese and German automotive sectors in their competition with the U.S. and China.
The success of a joint auto show to strengthen global leadership, however, depends on several factors. They include:
1. Change the scheduling. The Tokyo and Frankfurt auto shows now take place biennially in the same year. Instead, the two cities should alternatively host the event each year to make it a regular annual feature.
2. Invite nontraditional exhibitors from the IT, telecommunications and infrastructure sector.
3. Shift the focus from the current business-to-consumer (B2C) model to a business-to-business (B2B) and business-to-government (B2G) format to encourage professional interaction.
4. Invite high-profile speakers from related industries, such as Facebook's Mark Zuckerberg, Alibaba's Jack Ma and SoftBank's Masayoshi Son.
5. Encourage the participation of government officials, regulators and civil society groups to discuss socially important topics such as big data.
6. Emphasize the cooperative and international nature of the event and position it as the leading mobility showcase, centered around but not limited to automobiles.
Close cooperation between Japan and Germany to strengthen their single most important industry would benefit both countries not only when it comes to automobiles but in the whole mobility sector.
German Chancellor Angela Merkel's two visits to Japan this year give her and Japanese Prime Minister Shinzo Abe the perfect opportunity to discuss collaboration in autos. They are busy people but they should spare a minute to consider joint auto shows.
Jochen Legewie is the Tokyo partner of Kekst CNC and a former Japan Representative of VDA, the German Association of the Automotive Industry.