April 15, 2017 1:48 am JST

Honda, other Japan carmakers stepping up sales in China

More showrooms opening to sate appetite for SUVs

A Honda showroom in Shanghai

TOKYO -- Japanese automakers are moving to catch up with Western rivals in China by increasing dealerships and adapting to changing consumer tastes, including the growing popularity of SUVs.

Honda Motor will speed up opening new dealerships as more potential buyers emerge in inland China in addition to coastal cities. The company has two Chinese joint ventures -- Dongfeng Honda Automobile in Hubei Province and Guangqi Honda Automobile in Guangdong Province, and its dealership count was around 970 at the end of 2016, including those selling the luxury brand Acura. It aims to increase this by around 10% to 1,060 or more locations this year. Previously, showroom openings ranged between 10 to 50 locations per year, but the pace will now pick up.

The Vezel and XR-V sport utility vehicles have been faring well. Honda achieved Chinese sales of 1 million units for the first time in 2015, and the tally rose further in 2016 to 1.25 million.

Mazda Motor, meanwhile, will open a new type of dealership near Shanghai this summer. The high-end showroom will feature a classy black interior and exterior to target younger generations -- the main customers of SUVs.

Mazda' Chinese sales rose 24% in fiscal 2016 to a record 291,685 units. The CX-4 SUV rolled out last June has won the hearts of Chinese drivers in their late 20s and 30s. Mazda is considering more showroom openings and rebuilding of existing ones.

Toyota Motor, which had 150 dealerships for the upscale Lexus brand at the end of 2016, plans to add more. At an international auto show opening next Wednesday in Shanghai, the company will exhibit a hybrid version of its flagship luxury sedan LS, among other models. Last year, Lexus sales rose 25% in China -- the sharpest increase in all regions. Toyota hopes to capitalize on the momentum by showcasing new offerings.

The Chinese auto market overtook the American to become the world's largest in 2009. The market, excluding midsize and large buses and trucks, is seen growing from 27.58 million units in 2016 to 30.22 million in 2020 -- by nearly 10% -- according to British research company IHS Automotive.

After a major uptick from a compact-vehicle tax break last year, market growth is seen slowing in 2017. Yet SUVs continue to be popular, accounting for more than 30% of the market. The proportion is expected to near 40% in 2020, with SUVs driving market growth.

Mitsubishi Motors started building the Outlander midsize SUV in China last August via Hunan Province joint venture GAC Mitsubishi Motors. Switching to local production from shipments from Japan has let it cut the price by about 20%.

Such Western automakers as Volkswagen and General Motors enjoy a strong presence in the Chinese auto market. Even Nissan Motor, which leads Japanese players in China, sells only a third of Volkswagen's volume.

Japanese contenders will strive to close the gap by taking advantage of the fast-changing business environment, as is the case in many emerging markets. One challenge is coping with an expected rise of electric vehicles, which are promoted by the Chinese government to allay severe air pollution.

(Nikkei)

Honda Motor Co., Ltd.

Japan

Market(Ticker): TKS(7267)
Sector:
Industry:
Consumer Durables
Motor Vehicles
Market cap(USD): 54,444.93M
Shares: 1,811.42M

Mazda Motor Corp.

Japan

Market(Ticker): TKS(7261)
Sector:
Industry:
Consumer Durables
Motor Vehicles
Market cap(USD): 9,084.79M
Shares: 599.87M

Toyota Motor Corp.

Japan

Market(Ticker): TKS(7203)
Sector:
Industry:
Consumer Durables
Motor Vehicles
Market cap(USD): 198,920.54M
Shares: 3,262.99M

Mitsubishi Motors Corp.

Japan

Market(Ticker): TKS(7211)
Sector:
Industry:
Consumer Durables
Motor Vehicles
Market cap(USD): 11,904.66M
Shares: 1,490.28M

Nissan Motor Co., Ltd.

Japan

Market(Ticker): TKS(7201)
Sector:
Industry:
Consumer Durables
Motor Vehicles
Market cap(USD): 43,758.91M
Shares: 4,220.71M

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