Japanese car brands under threat across Europe as Chinese push into the region

EXCLUSIVE: For the first time since the early 1980s, or over 40 years, Japanese auto brands are edging ever closer to seeing their collective Western European new passenger car market share slide below 10 per cent.

As Chinese OEMs, lead by SAIC's MG brand and closely followed by BYD and Chery, forming the C3, accounting for three-in-four of all the Chinese models delivered across the 18 market region, see their collective share of the market hit 10% for the first time on a monthly basis in April, Japanese OEMs accounted for just 10.3% of the new market during the same period according to our exclusive monthly research using officially declared market data.

The likes of Toyota, which accounts for half of Japanese regional brand volumes, saw its volumes drop by 2% y/y during the opening 4 months of the year, with Lexus included, in a market that grew by 4.8% during the same period, resulting in its market share contracting to 6% from 6.4% during the same period last year.

However, it was the likes of Nissan that dragged Japanese brands down further. The company that recently omitted Europe from its core market plans in a recent strategic presentation focussing on its domestic market, the US and China, saw volumes fall by 14.3% y/y accounting for fewer than 100,000 units during the opening third of the year and correspondingly seeing its market share fall to just 2.2%, and significantly, below the levels of MG (101,085) and BYD (95,423), with the fast-paced Chery (85,600) trailed just behind.

Meanwhile, Mazda, which ironically is seeing some of its strength come from a Chinese-based model, the Mazda 6e, shipped from China and developed together with Changan, saw volumes increase by 8.8% year-over-year to 53,675 new units.

Honda, which hit annual volumes of just under 300,000 units as recently as 2007 when it had a local production presence in the UK, will fail to reach 100,000 again this year, with fewer than 25,000 models delivered (0.6% market share) during the first quarter of the year, or half the levels of Suzuki (49,400).  

Korean brands, which are almost entirely Hyundai/Kia models, also saw a worrying trend develop in April, with their market share falling to just 5.5% from a previous consistent level of above 7%. That is despite a strong new multi-technology model update, including the impressive 800-volt eGMP BEV architecture models.

Korean and Japanese brands that have thrived on having a partly opaque branding strategy, of being an alternative to European brands and performing well in brand agnostic markets such as the UK, Nordics and Southern Europe, with little patriotic purchasing there, given the lack of domestic brands in those markets, are now seeing their Chinese peers focus their market entry strategies on precisely those markets.

Meanwhile, European OEMs saw volumes increase over the same period last year by 1.5%, although that wasn't enough to prevent the collective market share dip below two-thirds of the market (65.6%) from 67.7% last year, given the total market grew by almost 5%.

While Volkswagen Group maintained a share above 25%, its namesake Volkswagen brand suffered a contraction dangerously close to single-digit territory, achieving 10.1% market share after 4 months this year, down from 11.1% during the same period last year. Volkswagen is the last remaining brand across the region with a double-digit share, underlining the hyper-competitive nature of the region.

The last time the Volkswagen brand ended the full year in single-digit territory was a decade before the fall of the Berlin Wall. However, strong gains from Škoda are preventing the Group volumes from falling further. The Czech brand is accounting for a record 5.3% share of the region's new car market, and remains just above Audi (5.1%), which is seeing an increasingly poor channel mix across its domestic German market, which remains concerning given the brand with four rings was supposed to be a net funding contributor to the group’s transition to becoming a leading electric car manufacturer across the region. Now the job is being left to the former budget brand and the group's new star, Škoda. Perhaps most concerning for incumbents is the fact that Chery, across its growing brand stable that so far includes five separate individual brands, taking an alternative strategy to BYD and SAIC which are more focused on core brands, are currently highly concentrated in just three European markets.

The UK, Italy and Spain soak up over 90% of its regional deliveries according to our exclusive research. Expect the reprieve in other markets to only be temporary as the Chinese OEM which threatens to topple BYD by the close of the year, expands further, trampling over incumbents trodden pathways, alongside the potential of some Sino cannibalisation. Finally with German purchase subsidies beginning from today, which don't discriminate against where the model is manufactured, like in other markets, expect Chinese OEMs to leverage Europe's largest passenger car market and Germany to move from its laggard position of seeing Sino-brand models soaking up just 3.6% of all new deliveries during the opening third of the year. However could that end up intensifying Volkswagen's current migraine, courtesy of Dr. Merz, sat in Berlin? Probably. Scope: Western Europe's 18 Markets: EU Member States prior to the 2004 enlargement, plus EFTA markets Norway, Switzerland, Iceland, plus UK – accounting for 90% of the enlarged European region.

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*Western Europe 18 Markets: EU Member States prior to the 2004 enlargement plus EFTA markets Norway, Switzerland, Iceland, plus UK