Toyota to Market Lexus Brand in Japan

Toyota, one of the world’s leading automakers in Japan will soon sell its Lexus line of luxury cars, which had been targeted exclusively on Europe and America, on its own shores.

Toyota is expected to sell the Lexus Showa worth around four million yen (about 40 million won) through 140 dealers nationwide starting August 30.

According to Tokyo newspapers on August 28, Toyota held a preview for its new Lexus Showa luxury car which Japan is so proud of at some dealers starting August 19, and gained a better-than-expected reaction from customers.

A woman in her forties who visited the showroom said, “I already have a foreign car so, I can’t afford it right away, but it stands up to comparison with imported ones.” The newspaper reported that a lot of couples in their thirties and forties showed up at the showroom.

Until now, America and Europe’s Mercedes-Benz, BMW and Limousine dominated the Japanese luxury car market. A sort of ”common sense” was that luxury cars are foreign cars, and Japanese cars are for less upscale markets.

Behind Toyota’s challenging of this common sense are signs of social change brewing in Japan.

It is said that 90 percent of the Japanese population are middle class. It reflects that Japan is a county where unseen equalitarianism checks even the expenditures of the rich. However, as the gap between haves and have-nots is widening, the new potential demand of the rich has been growing.

Accordingly, the market which targets the wealthy is rapidly ballooning. Shops mainly selling luxury watches worth one million yen or more (about 10 million won) have mushroomed, and some department stores have started to sell project goods at sale prices. Luxury apartments worth more than 100 million yen are selling right away as soon as sales notices come out. Apartments which rent for 500,000 yen (about five million won) a month are also gaining popularity.

The income gap per household which the Japanese government surveys every three years, hit a record high in 2002 and it is expected to widen further in this year’s survey.

“Luxury goods sell well regardless of ups and downs in an economy. As the domestic market matures, it is a matter of course for companies to target the high-income bracket.”

This is how an official at a bank survey institute in Japan evaluated Toyota’s new attempt.

Toyota’s market share in Japan is about 45 percent. Nonetheless, it is entering the luxury car market, because it is predicted that its absolute population will decline after 2007 and it is hard to expect the whole auto market to expand.

Some view Toyota’s introducing of Lexus into its own market as an example of Japanese brands experiencing globalization in earnest.

Hun-Joo Cho hanscho@donga.com