For Japan's carmakers, Europe market is worth the struggle

Fri Sep 28, 2012 1:47pm EDT
 
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By Yoko Kubota

PARIS (Reuters) - Japanese automakers, battered by a strong yen, are hunkering down in a stormy Europe, taking tentative steps to stand up to their aggressive South Korean rivals, in a market they see as challenging, but worth the effort.

All Japanese carmakers' sales declined in Western Europe in the eight months to August from a year ago, ranging from Toyota Motor Corp's (7203.T: Quote) 0.9 percent dip to Mitsubishi Motors' (7211.T: Quote) 34.5 percent tumble.

That compares with South Korean Hyundai Motor's (005380.KS: Quote) 9.3 percent rise and its affiliate Kia Motors' (000270.KS: Quote) 25.1 percent jump, as aggressive marketing of their stylish, affordable cars paid off, helped by a weak won and a free trade agreement between South Korea and the European Union.

Hyundai's market share grew to 3.2 percent in western Europe through August from 1.8 percent in 2007, while Kia's rose to 2.4 percent from 1.5 percent.

"It's a tough region for Japanese companies to do well, and also if we use cars from Japan, of course it's very difficult in terms of export," Karl Schlicht, Executive Vice President of Toyota Motor Europe said ahead of the Paris auto show, which opened to the media on Thursday.

WHY BOTHER?

So why do Japanese carmakers bother?

In fact, some don't - Daihatsu 7262.T, part of the Toyota group, will stop selling new cars in Europe in January 2013, blaming the high costs needed to meet Europe's tough environmental regulations and the strong yen.   Continued...