Despite admitting that its partnership with Japanese manufacturers has not always been successful, General Motors continues to promote cooperation with its three partners in the Asia Pacific region. Improvements in market share won’t come easily though, as domestic players are also looking to revitalise their dealership networks.
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GM, which formed a capital alliance with truck maker Isuzu in 1971, minicar maker Suzuki in 1981, and Fuji Heavy Industries, the maker of Subaru cars, in 1999, has a combined market share of 17% in the Asia Pacific region. Japan is the third largest auto market in the world after the US and Europe, with more than five million units sold a year.
GM has tried and failed for years to penetrate the highly competitive Japanese market. The products of local giants like Toyota, Honda and Nissan are more favoured by Japanese drivers, and the American car manufacturer is fully aware that products specifically targeted at the Japanese market should be developed if it wants to make any headway.
GM’s limited success in Japan has also been linked to the distribution system: its three partners lack broadly based dealer networks in the country. Although no major changes have been implemented to boost sales GM will continue to develop its original expansion plans.
To increase its presence in Japan, GM is reinforcing sales of its vehicles through Suzuki and Fuji Heavy. In a deal with Suzuki, GM has tripled the number of dealership selling the Chevrolet brand. Suzuki is now responsible for importation, distribution and aftersales of all Chevrolet vehicles. Fuji Heavy is expected to set up more showrooms for Saab vehicles.
However, competition from local players looks set to get fiercer. With domestic sales declining in 2002 by 1.9% to 5.79 million vehicles, and a forecast of slight recovery for 2003 with 5.85 million vehicles, Japanese manufacturers are also expanding and revitalising their dealerships. In order to respond faster to customer demand and compete more effectively, Honda is planning to renovate its 2,400 dealerships and Toyota will reduce its number of sales channels from five to four. No matter what moves GM makes, market share increases will not come easily.
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