* Car production in Japan halted by quake, hitting luxury
* German rivals, producing in China, already well ahead in
* Toyota has been talking about making Lexus's in China for
By Fang Yan and Don Durfee
BEIJING, March 15 Japan's car makers, already
reeling from the country's natural disaster, may find that their
woes extend to an increasingly important market: China's luxury
Toyota Motor , Honda Motor and Nissan Motor
see China's wealthy consumers as a great opportunity
for their top-end brands. Nissan, for one, doubled sales of its
Infiniti cars to nearly 11,000 units in 2010 and aims to double
sales again this year, according to analysts.
Such goals could now prove impossible to meet.
Unlike other foreign car makers, the top Japanese
manufacturers export their luxury cars to China rather than
producing them locally. With Toyota, Honda and Nissan having
shut all of plants in Japan after the earthquake and tsunami,
exports to China will suffer.
"The Japanese are already way behind the German brands. The
earthquake will hurt their luxury brands further as they don't
make them here in China," said Klaus Paur, managing director of
Greater China at Synovate Motoresearch.
China, already the world's biggest car market, boasts one of
the fastest growing luxury car segments. Automakers sold roughly
500,000 thousand high-end cars in China last year and the size
could be easily double in the next five years, according to some
LAGGING IN LUXURY
For companies such as Toyota and its high-end Lexus brand,
selling to China's newly rich, who are fueling demand for luxury
items from Gucci handbags to Rolls-Royces, is a top priority.
"Lexus has been the best-selling luxury brand in the United
States for years," said Yale Zhang, managing director of
Automotive Foresight (Shanghai), an industry consultancy.
"Gaining market share in China is very important for Lexus
as it could be its second largest market in 5 years."
But Japanese car makers have lagged their German
The world's high-end car makers, from Audi AG to
Bayerische Motoren Werke AG , have racked up strong
sales in China. Daimler AG's Mercedes-Benz sold
147,670 units in China last year, outpacing the 70 percent
growth of the premier car segment.
Sales of BMWs came to 168,998 cars in 2010, exceeding the
company's own target. Audi sold 227,928 units, up 43 percent
from a year earlier.
By contrast, Toyota sold roughly 48,000 Lexus cars in China,
a fifth of industry champion Audi, and Honda sold a mere 4,000
units of the Acura, its topline model, according to data
provided by Synovate Motoresearch.
MADE IN JAPAN
Toyota, Honda and Nissan produce their mass-market models,
including the Camry, Accord and Teana, in China. Production of
those vehicles will be largely unaffected by the disaster
unfolding in Japan, said analysts.
All three companies have a massive supplier base in China
which provides at least 80 to 90 percent of auto parts locally.
"There are hundreds of parts in a single vehicle. Some auto
makers may also get parts from Japanese suppliers in China, but
they could be easily replaced as there are so many alternative
out there," said Cao He, a veteran analyst with Minzu
But their strategy of keeping production of premier models
in Japan has forced them to charge higher prices and has helped
keep their market share low.
"There has been talk about Toyota localising Lexus
production in China for years," said Zhang. "I am sure Toyota
will make up its minds someday, it's just a question of when."
Until then, they'll face stiff competition from the German
automakers, which make select topline models in China assembly
plants. Audi A6, made at its venture with Chinese state
automaker FAW Group, has long been the favorite car of senior
Chinese state leaders.
According to Goldman Sachs, the profit impact of stopping
car production in Japan for one day would be about 6 billion yen
($73.3 million) for Toyota and 2 billion yen for Honda and
($1 = 81.915 Japanese Yen)
(Editing by Lincoln Feast)